Commercial Rates Relief UK — Small Business, Retail Discount, and Empty Property Relief

Small Business Rate Relief (SBRR) and the Small Business Multiplier

Small Business Rate Relief (SBRR) is the most widely available mandatory rates relief and applies automatically to eligible properties in England: (a) SBRR eligibility: a ratepayer (occupier or landlord if the property is empty) who occupies only one property in England with a rateable value of less than £15,000 qualifies for SBRR; for properties with a rateable value of exactly £12,000 or less, 100% SBRR applies (zero rates payable); for properties with a rateable value between £12,001 and £14,999, a tapered SBRR applies on a sliding scale (the relief percentage decreases as the rateable value approaches £15,000); (b) The small business multiplier: ratepayers who occupy a property with a rateable value below £51,000 automatically pay at the small business multiplier (lower than the standard multiplier); this applies even if the property is not eligible for SBRR itself; for 2024-25 the small business multiplier is 49.9p and the standard multiplier is 54.6p; (c) Second property restriction: if the ratepayer takes on a second property, the entitlement to 100% SBRR on the first property ends (though they may still benefit from the tapered relief and the small business multiplier); there is a 12-month transitional period of maintained relief when a second property is acquired; (d) Application: in England, SBRR must typically be applied for with the local billing authority (London borough or district/unitary council); many billing authorities apply SBRR automatically where the ratepayer has declared a single property; in Wales, rates relief schemes differ (non-domestic rates devolved to Welsh Government — mandatory small business rates relief applicable to properties with a rateable value under £6,000 at 100%; tapered to £12,000); in Scotland, properties with a rateable value up to £15,000 receive 100% Small Business Bonus Scheme (SBBS) relief (devolved to Scottish Government); (e) New build and unoccupied property SBRR: SBRR is generally not available for empty properties — the empty property rate relief (see below) is a different scheme; however, SBRR applies to the occupied period and empty property relief applies to the empty periods.

• 100% SBRR for RV up to £12,000: properties in England with a rateable value up to £12,000 and occupied by a ratepayer with a single property pay zero business rates; the relief is mandatory and must be applied for with the billing authority
• Tapered SBRR (RV £12,001–£14,999): the relief decreases on a sliding scale; at RV £14,999, the SBRR has tapered to zero; above £15,000 no SBRR is available but the small business multiplier still applies up to RV £51,000
• Small business multiplier (up to RV £51,000): all occupied properties with an RV below £51,000 use the lower small business multiplier; for 2024-25, the multiplier is 49.9p vs the standard 54.6p — a meaningful saving on larger small business properties
• Second property rule: if a SBRR ratepayer acquires a second property, SBRR on the first property ends after the 12-month transitional period; carefully consider the SBRR impact before taking on additional properties
• Wales and Scotland: Wales has its own mandatory small business rates relief scheme (100% up to RV £6,000; tapered to £12,000); Scotland has the Small Business Bonus Scheme (100% relief up to RV £15,000); both devolved schemes differ from England in thresholds and tapering

Retail, Hospitality and Leisure (RHL) Discount and Other Mandatory Reliefs

The Retail, Hospitality and Leisure (RHL) discount was introduced to support the sectors most affected by the pandemic and has been extended and modified through successive government budgets: (a) RHL discount 2024-25: for the 2024-25 financial year, eligible retail, hospitality and leisure properties in England receive a 75% RHL discount (capped at £110,000 per business per financial year); eligible properties include retail shops; cafes; restaurants; pubs; hotels; gyms; theatres; cinemas; music venues; some leisure facilities; the government publishes detailed guidance on which property uses qualify; (b) The £110,000 cap and the subsidy control regime: the RHL discount is treated as a subsidy under the Subsidy Control Act 2022 (which replaced the EU State Aid regime); the total RHL discount claimed by a single ratepayer across all their properties is capped at £110,000 per year; ratepayers must declare their total subsidy position to their billing authorities; (c) Mandatory charity relief (80%): properties occupied by charities and used wholly or mainly for charitable purposes qualify for mandatory 80% charity relief; this is mandatory (billing authorities must grant it); billing authorities may also grant an additional discretionary 20% top-up; (d) Rural rate relief: properties in designated rural areas with a rateable value below £8,500 (sole post office; sole food shop; sole pub or petrol station in the designated rural settlement) qualify for mandatory 50% rural rate relief; billing authorities may grant an additional discretionary 50%; effectively, qualifying rural properties may pay no business rates; (e) Enterprise zone relief: properties in designated enterprise zones qualify for mandatory 80% rates relief for the first 5 years of occupation (up to a maximum relief per property); enterprise zones in England are designated by central government; (f) Fresh Start relief (Scotland): in Scotland, the Fresh Start relief is available for properties that have been empty for 12 months or more and have changed to a new business use — 100% relief for 12 months from first occupation; (g) Transitional relief (2023 revaluation): following the April 2023 revaluation, the government introduced a transitional relief scheme to phase in significant rateable value increases and limit the impact of decreases; downward transitions ('downwards transition') limit the speed at which properties benefit from RV decreases — meaning some properties pay more than the new RV would otherwise imply; upward transitions limit the speed of RV increases.

• RHL discount 2024-25: 75% discount (capped at £110,000 per business per year) for eligible retail, hospitality and leisure properties in England; subsidy control declarations required; check eligibility against the government's published list of qualifying property uses
• Mandatory charity relief: 80% mandatory relief for property occupied by charities and used for charitable purposes; billing authorities may grant a further discretionary 20% top-up; applies to charity shops, offices, and operational charitable premises
• Rural rate relief: properties in designated rural settlements with a sole-provider use (post office; food shop; pub; petrol station) and RV below £8,500 qualify for mandatory 50% relief; discretionary 50% top-up makes many qualifying rural properties effectively rates-free
• Enterprise zone relief (80% for 5 years): enterprise zone occupiers in England receive mandatory 80% relief for up to 5 years; enterprise zones are designated by government and vary by location; check the government's enterprise zone map for current designations
• Transitional relief (2023 revaluation): phase-in limits mean some properties may still be paying above or below their true RV liability in 2024-25; check whether transitional relief applies and whether to appeal the rateable value if the 2023 assessment is incorrect

Empty Property Rate Relief — Rates Liability for Vacant Commercial Property

Empty commercial property attracts business rates liability after the expiry of the initial empty property rate relief period: (a) Empty property rate relief (mandatory): all non-domestic vacant properties receive 100% relief from business rates for the first 3 months of vacancy (6 months for industrial/storage buildings: factories; warehouses; industrial premises); after the initial relief period ends, the full business rate is payable on the vacant property (at the standard or small business multiplier, as applicable) — there is no further automatic reduction; (b) The 6-week reoccupation trick: some landlords attempt to reset the 3-month (or 6-month) empty property relief by briefly re-occupying the property for 6 weeks or more (the minimum occupation period to restart the empty property relief cycle) and then emptying it again — HMRC and billing authorities are aware of this practice and have challenged it where the re-occupation is clearly artificial; there must be genuine business use during the 6-week period; (c) Charity reset: where a charity occupies a vacant property (even briefly), the property qualifies for 80% mandatory charity relief for the period of charitable occupation; this is a legitimate mechanism for reducing rates liability during void periods where a charity partner can use the space; (d) Empty listed buildings: listed buildings are exempt from empty property rates (unlimited exemption); if a commercial landlord holds a listed building that is vacant, no business rates are payable during the vacancy; (e) Unoccupied new build properties: newly built commercial properties that are first completed and remain unoccupied qualify for the standard 3-month (or 6-month industrial) empty property rate relief from the date of completion (not from the date of construction); after the empty property relief period, full rates apply on new builds as on any other vacant property; (f) Rates liability during landlord's ownership: where a tenant vacates and the landlord takes back the property at the end of the lease, the landlord (as ratepayer) becomes liable for business rates from the date of vacation — the tenant's liability ends when they surrender possession; the landlord must notify the billing authority promptly and ensure the empty property relief application is lodged in time.

• 3-month empty property relief: all vacant commercial properties receive 100% relief for the first 3 months (6 months for industrial/storage); after expiry, full business rates apply at the standard or small business multiplier — a significant cash cost for landlords with void properties
• 6-week reoccupation to restart relief: genuine business reoccupation for 6+ weeks restarts the empty property relief period; artificial or sham reoccupation is challenged by billing authorities; any reoccupation must involve genuine business activity
• Charity occupation reset: a charity occupying the vacant property (even briefly) qualifies for 80% mandatory charity relief during occupation and may restart the empty property relief cycle; a legitimate strategy where a suitable charity partner can use the space
• Listed building exemption: vacant listed buildings are entirely exempt from empty property business rates (no time limit); if a landlord holds a vacant listed commercial building, no rates are payable during the vacancy — a significant advantage of listed building ownership
• Notify billing authority promptly: when a tenant vacates and the landlord takes back the property, notify the billing authority immediately to ensure the 3-month (or 6-month) empty property relief clock starts from the correct date; delays in notification can result in retrospective rates liability from the date the property was actually vacant

Rateable Value Challenges — Check, Challenge, Appeal (CCA) Process

The Valuation Office Agency (VOA) sets rateable values for all non-domestic properties in England and Wales, based on the property's hypothetical open market rental value at the antecedent valuation date (April 2021 for the 2023 list). If a landlord or tenant believes the rateable value is incorrect (too high), they can challenge it through the Check, Challenge, Appeal (CCA) process: (a) Check: the first stage is the 'check' — providing the VOA with accurate factual information about the property (floor areas; description; use); the check must be completed before a challenge can be submitted; checks can be completed online via the VOA business rates valuation account; (b) Challenge: if after the check the landlord or tenant believes the rateable value is still incorrect, they can submit a formal challenge — providing evidence of comparable rental transactions or material facts to support a reduced rateable value; the VOA has 18 months to respond to a challenge; (c) Appeal: if the challenge is unsuccessful or unresolved, the landlord or tenant can appeal to the Valuation Tribunal for England (VTE) within 4 months of the challenge decision; VTE hearings are held on paper or in person; costs are generally not recoverable at the VTE; (d) Material change of circumstance (MCC) appeals: if there has been a physical change to the property (e.g. damage; partial demolition; change in local economic conditions) since the rateable value was set, a material change of circumstance (MCC) appeal can be submitted — these are separate from the standard CCA process and can be submitted at any time during the rating list; the MCC route was used extensively during the pandemic for properties temporarily closed by government restrictions; (e) Agents and advisers: RICS-regulated rating surveyors act as specialists in rateable value challenges; many operate on a contingency fee basis (success fee as a percentage of the rates saving achieved); landlords should seek references and check the adviser is regulated; unregulated claims management companies have created problems in this sector.

• 2023 revaluation (April 2023): the VOA revalued all commercial properties based on rental values at April 2021; rateable values changed significantly for many properties — check whether the 2023 rateable value reflects the actual rental value and whether a challenge is warranted
• Check, Challenge, Appeal (CCA): the 3-stage process for contesting a rateable value; a Check must be completed before a Challenge; a Challenge must be submitted before an Appeal to the Valuation Tribunal for England; the VOA has 18 months to respond to a Challenge
• Material change of circumstance (MCC): a physical change to the property (damage; partial demolition; change in access; change in local economic conditions) can support an MCC appeal outside the standard CCA process; MCCs can be submitted at any time during the rating list
• RICS-regulated rating surveyors: use a regulated RICS-member rating surveyor for rateable value challenges; many operate on a contingency fee basis (no saving, no fee); check the surveyor is RICS-regulated and has experience in the relevant property type and location
• Backdated savings: a successful rateable value challenge is backdated to the date of the challenge submission (not the date of the rateable value coming into force); any overpayment of rates during the challenge period is repaid (or credited) by the billing authority

Frequently asked questions