Explanatory note
(This note is not part of the Order)
Provisions in respect of small business rate relief were inserted into Part 3 of the Local Government Finance Act 1988, with effect from 1st April 2005, by sections 61 and 62 of the Local Government Act 2003.
Article 3 of this Order, which applies in relation to hereditaments in England, together with section 43(4B) of the Act, provide that the conditions to be satisfied to obtain small business rate relief are that—
the hereditament must—
be the only hereditament in England that the ratepayer occupies, except for the hereditaments in England that he occupies that are disregarded in accordance with article 3(4); and
have a rateable value which is not more than £21,499 for those situated in Greater London and £14,999 for those outside Greater London, and
the ratepayer must apply to the billing authority concerned for the relief, by an application, for which the prescribed form is set out in the Schedule. An application may be served on the billing authority in accordance with article 5.
Article 6 prescribes the amount of E, which determines the amount of relief to be given to a particular hereditament under the formula in section 43(4A)(a) of the Act.
The small business rate relief has two elements. Firstly, hereditaments which satisfy the conditions in article 3 and are shown on a local non-domestic rating list with a rateable value of up to £10,000 will benefit from a percentage reduction in their rates liability of up to 50%. The amount of the reduction provides relief on a sliding scale; the smaller the rateable value, the greater the reduction (up to a maximum of 50%). Secondly, hereditaments which satisfy the conditions in article 3 and are shown on a local non-domestic rating list with a rateable value which is not more than £21,499 for those situated in Greater London and £14,999 for those outside Greater London will have their rates liability under section 43 of the 1988 Act calculated using the lower small business non-domestic rating multiplier (determined under Schedule 7 to the 1988 Act, as amended by the 2003 Act) instead of the standard non-domestic rating multiplier.
A full regulatory impact assessment of the effect that this instrument will have on the costs of business is available from Business Rates Team, Office of the Deputy Prime Minister, Zone 5/H2, Eland House, Bressenden Place, London, SW1E 5DU. A copy can also be found at http://www.local.odpm.gov.uk/finance/busrats1.htm