Many business owners in the UK may be unaware that they are eligible for business rates relief. Business rates or non-domestic rates, is a local tax charged to non-residential properties and is used to help fund local councils.
A business is considered as non-residential property if it meets one of the following criteria:
1) The premises are occupied for purposes other than trade or profession which generate profits
2) Income solely from rent does not exceed £5000 in any financial year
3) Income from trade or profession does not exceed £3000 per annum
4) The premises have only been used for trade or profession for less than four years.
Business rates reliefs are generally available to:
1) Non-domestic undertakings operating as a limited company of which the member is a shareholder or director and where the annual turnover is less than £10,000
2) The owner’s family members/wives if they are both non-residential property occupiers.
3) Businesses that have already paid business rates for four years or more in a row (that is the year it was first due for payment).
4) Limited liability partnerships where all its partners are non-residential property occupiers. Where each partner has an individual rateable value for 2016/17, relief must be claimed separately.
5) The rent paid by a non-residential occupier is less than £1,000 per annum.
Claims regarding business rates relief are made to the local authority where the property is situated. Results may vary depending on a number of factors, such as the number of properties eligible for business rates relief in that area and the amount of rates which is paid.
Business [non-domestic] rates relief can be used to pay business rates on a property which has an annual rateable value (ARV) not exceeding £3,878. The property must also be used exclusively for trade or profession, and the relief is only available to a maximum of one property, per individual. To qualify for business rates relief under this category, businesses will have to submit a completed form BTR1OR. The form BTR1-OR is also used if a change needs to be made to the relief claim by an existing claimant.
Those wishing to claim business rates relief can do so by using Form BTR2-OR, and have until 31st January each year to submit this form, although claims submitted outside of this time period will be considered on a case-by-case basis by local authorities.
Business rates relief is only available where the claimant files their claim with the local authority in the relevant year. Businesses cannot sub-let their property, nor share the tax burden by claiming relief on behalf of another. The limits within which a corporation or partnership can claim business rates relief are different from that of an individual, whose liability for business rates is unlimited for each separate property used for trade or profession. In order to qualify as a limited company, there must be at least two members and no more than 250 members in total across all businesses owned by a single person. The relief is not available, however, where the property’s annual rent is in excess of £1,000.
Partnerships and Limited Liability Partnerships
For partnerships and limited liability partnerships, all partners must be either non-residential property occupiers or non-residential property owners. If a shareholder or partner is both a non-residential property occupier and non-residential property owner, then they can only claim business rates relief on one of the two roles they fulfil. The reliefs are granted to those individuals who have an individual rateable value in respect of their properties. No group relief is permitted.
Certain business rates reliefs are available to individuals and corporations and , as a result of the above, it is important to ensure that you are eligible before claiming. Business owners should seek expert advice before submitting their claims for the 2017/18 fiscal year.