The Non-Domestic Rating (Small Business Rate Relief) (England) Order 2012

EXPLANATORY NOTE

(This note is not part of the Order)

Article 1 provides that this Order has effect for the purposes of determining eligibility for, and calculating the amount of, small business rate relief in respect of days falling on or after 1st April 2012. The existing order – the Non-Domestic Rating (Small Business Rate Relief) (England) Order 2004 (S.I. 2004/3315) (as amended) – which is revoked by article 5 of this order in respect of chargeable days falling after 31st March 2012, will continue to have effect in relation to chargeable days falling prior to 1st April 2012.

Article 2 of this Order, together with section 43(4B) of the Local Government Finance Act 1988 (“the 1988 Act”), provides that the condition to be satisfied to obtain small business rate relief is that the hereditament must have a rateable value which is not more than £17,999 if situated outside Greater London and £24,999 if situated in Greater London.

Article 4 (in respect of the 2012/13 financial year) and article 3 (in respect of subsequent financial years) prescribe the amount of E under section 44(9)(a) of the 1988 Act, which determines the amount of relief to be given to a particular hereditament under the formula in section 43(4A)(a) of the 1988 Act. The effect of article 4 is to provide for a higher level of relief for the 2012/13 financial year.

Small business rate relief has two elements. Firstly, all hereditaments which satisfy the condition in article 2 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 Local Government Act 2003) instead of the standard national non-domestic rating multiplier. Secondly, a hereditament which satisfies the condition in article 2, is the sole property occupied by the ratepayer concerned (subject to the provisions on hereditaments to be disregarded for these purposes in articles 3(6) and 4(7)), and which has a maximum rateable value of £12,000 will, in addition, benefit from a percentage reduction in its rates liability of up to 100% for the 2012/13 financial year and up to 50% for subsequent financial years.

A full impact assessment of the effect that this instrument will have on the costs of business and the voluntary sector has been laid before Parliament and copies placed in the library of each House. A copy is available from the Department for Communities and Local Government’s Business Rates and Valuation Division (telephone [phone]).