Non-Domestic Rates - Small Business Rates Relief

Guidance

About this guidance

This document provides guidance on the operation and delivery of the Small Business Rates Relief Scheme (SBRR). This guidance applies to Wales only.

The guidance does not replace any existing non-domestic rates (NDR) legislation or any other relief.
 
SBRR may be amended at any time, in which case it is possible that businesses may cease to be eligible for relief.

Enquiries on the scheme should be sent to: localtaxationpolicy@gov.wales

A range of other mandatory and discretionary NDR reliefs are also available and provide assistance to specific types of property or occupiers; these include charitable relief and empty property relief.

Further information about NDR relief schemes can be found on our Business Wales webpages

Introduction

NDR are also known as business rates. NDR in Wales are a local tax for raising revenue to pay for local government and police services from non-domestic property owners and occupiers. There are approximately 120,000 non-domestic properties in Wales and NDR raises more than £1billion a year in Wales which, once collected, is redistributed in full to local authorities and Police and Crime Commissioners.

NDR are calculated using two variables:

  • the rateable value of a property, which is set by the Valuation Office Agency and
  • the multiplier. This is set on an annual basis by the Welsh Government according to primary legislation, and usually increases in line with inflation.

SBRR in Wales is entirely funded by the Welsh Government and is the largest NDR relief scheme operating in Wales, providing mandatory rates relief to properties according to their rateable value and broad category of use.

The Welsh Government provides NDR relief to eligible small businesses.

  • Eligible business premises with a rateable value of up to £6,000 receive 100% relief; and
  • Those with a rateable value between £6,001 and £12,000 receive relief on a tapered basis from 100% to zero.
  • Certain business categories benefit from an additional level of relief. For example post offices and registered childcare premises.
  • From April 2018 the number of properties eligible for SBRR is limited to two properties per business in each local authority.

The permanent Small Business Rates Relief Scheme

How is the relief provided?

The SBRR scheme is administered by local authorities and is automatically applied to the bills of eligible ratepayers.

How is SBRR administered?

Local authorities are responsible for providing ratepayers with clear and accessible information on the details and administration of the scheme. If, for any reason, an authority is unable to provide this relief to eligible ratepayers, consideration should be given to notifying eligible ratepayers that they qualify for the relief and that their bills will be recalculated.

Local authorities will be asked to identify the total amount of relief provided under the scheme in their NDR Returns (NDR1 and NDR3).

How will properties benefit from relief?

The Welsh Government provides NDR relief to eligible small businesses.

  • Eligible business premises with a rateable value of up to £6,000 receive 100% relief; and
  • Those with a rateable value between £6,001 and £12,000 receive relief on a tapered basis from 100% to zero.

Certain business categories benefit from an additional level of relief. For example post offices and registered childcare premises.

The number of properties eligible for SBRR is limited to two properties per business in each local authority.

Going forward, the SBRR scheme will continue to be developed to ensure the relief provided remains targeted to where support is most needed to best meet the needs of Wales. It is the intention of Welsh Government to take a progressive, fair and transparent approach towards local taxation in Wales which continues to provide vital funding for local services. Delivering a permanent rates relief scheme for small businesses is a key step in this process.

The regulations setting out SBRR are available on Legislation.gov.

What support can businesses expect?

Table 1 provides an illustration of the level of support qualifying small businesses could expect to receive.

Table 1: Illustration of relief for small businesses

Rateable Value

SBRR

2021-22 Liability

(£)

SBRR

(£)

Liability after

SBRR

(£)

1,000

100%

535

535

0

2,000

100%

1,070

1,070

0

3,000

100%

1,605

1,605

0

4,000

100%

2,140

2,140

0

5,000

100%

2,675

2,675

0

6,000

100%

3,210

3,210

0

7,000

83%

3,745

3,121

624

8,000

67%

4,280

2,853

1,427

9,000

50%

4,815

2,408

2,408

10,000

33%

5,350

1,783

3,567

11,000

17%

5,885

981

4,904

12,000

0%

6,420

0

6,420

13,000

0%

6,955

0

6,955

 

Multiple occupation limit

Previously SBRR in Wales provided relief to all eligible properties with no restriction on the relief provided relative to the number of small properties that a business occupies. This meant a national chain could benefit from relief across all the small properties it occupies across Wales.

This approach contrasted with the SBRR schemes operating in other parts of the UK which impose some form of eligibility restriction on either the number of properties occupied by a company or the total amount of relief a company can receive.

How are businesses occupying multiple small properties treated?

The number of properties eligible for SBRR is limited to two properties per business in each local authority.

It is the responsibility of the ratepayer to inform their local authority if they believe this restriction applies to their properties.

Once informed the administering local authority is responsible for amending the NDR bill.

Properties which meet the childcare or post office conditions will not be affected by this restriction.

Ratepayers should contact their individual local authority with any queries regarding their NDR bill and entitlement to rates relief.

Why do registered childcare premises benefit from enhanced SBRR?

Taking Wales Forward  commits the Welsh Government to delivering 30 hours of free childcare for working-age parents of 3-4 year olds for 48 weeks of the year. The aim of the policy is to remove the barriers to securing employment and to help those who want to work or start a business but are currently constrained by childcare pressures.

Concerns have been expressed by the industry that day nurseries are particularly affected by NDR because, in order to meet to meet the National Minimum Standards for Regulated Childcare (NMS), they tend to occupy larger premises. This means that often their rateable values are proportionately larger than other small businesses.

To support the delivery of the 30-hour childcare commitment, the Welsh Government is providing 100% relief to all registered childcare providers in Wales, this higher level of relief started on 1 April 2019, it is in place for three years to 31 March 2022, during which time it will be evaluated to assess its effect.

Ratepayers should contact their individual local authority with any queries regarding their NDR bill and entitlement to rates relief.

Why do Post Offices benefit from enhanced SBRR?

The Welsh Government believes small post offices have a valuable role to play in supporting local communities, particularly in disadvantaged and rural areas where facilities can be scarce, and they deliver services to vulnerable people including the elderly and disabled.

Many smaller post offices are run by sub-postmasters as private businesses rather than being owned and run by the Post Office itself.

For these reasons the Welsh Government provides further support for smaller post offices as follows:

  • Post offices with a rateable value up to £9,000 receive 100% relief;
  • Post offices with a rateable value between £9,001 and £12,000 receive 50% relief.

Ratepayers should contact their individual local authority with any queries regarding their NDR bill and entitlement to rates relief.

Example of enhanced relief for Post Offices

Table 2 below demonstrates how the enhanced relief for post offices is applied using the taper.

Table 2: Illustration of enhanced relief for Post Offices

 

Rateable Value

SBRR

2021-22 Liability

(£)

SBRR

(£)

Liability after

SBRR

(£)

1,000

100%

535

535

0

2,000

100%

1,070

1,070

0

3,000

100%

1,605

1,605

0

4,000

100%

2,140

2,140

0

5,000

100%

2,675

2,675

0

6,000

100%

3,210

3,210

0

7,000

100%

3,745

3,745

0

8,000

100%

4,280

4,280

0

9,000

100%

4,815

4,815

0

10,000

50%

5,350

2,675

2,675

11,000

50%

5,885

2,943

2,943

12,000

50%

6,420

3,210

3,210

13,000

0%

6,955

0

6,955

 

What types of hereditaments are not considered to be eligible for SBRR?

There are a number of exceptions from SBRR. These are primarily for types of properties which are not considered to be consistent with the definition of a small business. Some of the exceptions also recognise the fact that certain types of property are eligible for other forms of relief.

The exceptions to the current SBRR scheme include:

  • Hereditaments (non-domestic properties) occupied by a council, a police and crime commissioner, or the Crown;
  • Beach huts;
  • Hereditaments used exclusively for the display of advertisements, parking of motor vehicles, sewage works or electronic communications apparatus.

Are unoccupied properties eligible for SBRR?

To qualify for SBRR, an eligible property must also be occupied. Unoccupied properties are eligible for empty property relief. More information can be found in our relevant guidance document.


Are properties occupied by charities eligible for SBRR?

Properties occupied by charities are not eligible receive SBRR. Charities are eligible for charitable rate relief. More information can be found in our relevant guidance document. 

Are hydro projects eligible for SBRR?

All forms of energy projects and small-scale energy providers are eligible for support through the SBRR scheme providing they meet the criteria.

The Welsh Government is aware there is evidence which indicates that small-scale energy projects have been affected more by the revaluation than other types of businesses.

We are providing grants to help eligible hydropower projects with their business rates. Hydropower projects extract energy from water courses to generate electricity. Community hydropower projects with a rateable value up to £50,000 can apply for support towards their 2021-22- business rates. For more information contact EnergyPolicyMailbox@gov.wales.

What can I do if I have reason to believe my relief has been calculated incorrectly?

If ratepayers have reason to believe the relief allocated to their property or your NDR bill is incorrect, you should contact your administering local authority which will be able to deal with your enquiry and respond to your questions.