At the Budget on 27 October 2021 the government announced that it would extend the current transitional relief scheme and the supporting small business scheme for one year to the end of the current revaluation cycle..

This relief is available to ratepayers who have lost some or all of their small business rate relief or rural rate relief as a result of an increase in rateable value in the 2017 revaluation. The Government introduced SSB from 1 April 2017 to help phase-in large percentage increases for those affected.

This scheme limits any increase in business rates to £600 per year and will apply for a maximum of five years. Relief will automatically be applied each year that the business is eligible to receive it; this could be every year for the five years or could end sooner if the bill amount without the relief is reached.

The Supporting Small Businesses relief will ensure that the increase per year in the bills of affected ratepayers is limited to the greater of:

  • A percentage increase per year of 5%, 7.5%, 10%, 15% and 15% 2017/18 to 2022/23 all plus inflation. For the first year of the scheme the percentage increase is taken against the bill for 31 March 2017 after small business rate relief or rural rate relief , or
  • A cash value of £600 per year (£50 per month). The Government’s intention is that the cash minimum increase ensures that those ratepayers paying nothing or very small amounts in 2016/17 after small business rate relief are brought into paying something.

In the first year of the scheme, this means all ratepayers losing some or all of their small business rate relief or rural rate relief will see the increase in their bill capped at £600. The cash minimum increase is £600 per year thereafter. This means that ratepayers who are currently paying nothing under small business rate relief and are losing all of their entitlement to relief (i.e. moving from £6,000 rateable value or less to more than £15,000) would under this scheme be paying £3,000 in year 5.

Ratepayers remain in the Supporting Small Businesses relief scheme for either 5 years or until they reach the bill they would have paid without the scheme.

Those on the Supporting Small Businesses relief scheme whose 2017 rateable values are £51,000 or more will not be liable to pay the supplement (1.3p) to fund small business rate relief while they are eligible for the Supporting Small Businesses relief scheme.

As with all reliefs, the amount of relief awarded under the Supporting Small Businesses relief scheme will be recalculated in the event of a change of circumstances such as a change to the rateable value.

A change of ratepayers will not affect eligibility for the Supporting Small Business relief scheme but eligibility will be lost if the property falls vacant or becomes occupied by a charity or community amateur club.

Subsidy control

The extension of transitional relief and Supporting Small Business (SSB) relief scheme is likely to amount to subsidy. Any relief provided by Local Authorities under this scheme will need to comply with the UK’s domestic and international subsidy control obligations (See the BEIS guidance for public authorities which explains the subsidies chapter of the UK-EU Trade and Cooperation Agreement (TCA), World Trade Organisation rules on subsidies, and other international subsidy control commitments).

To the extent that a Local Authority is seeking to provide relief that falls within the Small Amounts of Financial Assistance Allowance, Article 364 of the TCA allows an economic actor (e.g. a holding company and its subsidiaries) to receive up to 325,000 Special Drawing Rights (£343,000 as at 9 December 2021) in a three-year period (consisting of the 2022/23 financial year and the two previous financial years) Expanded Retail Discount granted in either 2020/21 or 2021/22 does not count towards the £343,000 allowance but BEIS business grants (throughout the 3 years) and any other subsidies claimed under the Small Amounts of Financial Assistance limit, should be counted.

In those cases where it is clear to the local authority that the ratepayer is likely to breach the Small Amounts of Financial Assistance Allowance then the authority should automatically withhold the relief.

Policy

Warwick District Councils Supporting Small Business relief scheme policy