April’s budget statement seems like so long ago. Since then, we’ve not only got a new Chancellor of the Exchequer, but a whole new Prime minister and Government.

Thankfully however, George Osbourne’s concessions to small businesses have remained unaffected by this. With April 2017 still seeing the Small Business Rate Relief (SBRR) double from 50% to 100% and the threshold for small businesses rise from £6,000 to a maximum £15,000.

With the threshold for the higher rate rising from £18,000 to £51,000 in a move that has largely seen as a positive for small business owners.

What this means in practical terms

What are business rates?

Business rates are “a controversial tax on nonresidential properties such as shops, restaurants and factories.” They have been seen as prohibitive to small businesses, demotivating those who wish to get started on their own projects. They cut down on potential profits and make it harder to make money.

How are they calculated?

Business rates are calculated based on the market value of the property. This is known as the rateable value. The rateable value is multiplied with the ‘poundage’, set by government.

Rate relief

Until now, businesses with business rates under £6,000 would get rate relief, meaning they would not have to pay this additional tax. Now that the relief has been extended to businesses with rates up to £15,000, many small businesses will be brought under the umbrella.

Who this affects and how

This change affects 600,000 small businesses, who won’t pay any business rates tax at all, along with a further 250,000 businesses who will see their rates cut. Many of these businesses can expect to save around £6,000 per annum.

Relieves the burden of wage and tax reforms

April also saw the national living wage reforms go into effect, starting at a minimum of £7.20 per hour. This is to increase to £9.00 per hour by 2020. Many businesses have felt the crunch of these new regulations, and business rates relief will help them adapt to the changes.

The Budget also included increases to insurance premium tax (IPT), which puts an extra tax burden on businesses with big insurance premiums. The rise in IPT was not as big as expected, and with the business rates reduced or abolished for small businesses, it won’t have the damage expected on businesses’ profits.

Raising the threshold for business rate relief is undoubtedly good for small businesses, seeing as government losses will be recouped from reforms on big corporations.

While IPT and national living wage will temper the impact, businesses can still expect to see significant savings. Small businesses who have been expecting the worst and wondering where to make the extra money to pay IPT and increased wages, have been given a way forward.

Business rate relief will not significantly increase the profits of small businesses. However, it will allow them to keep their heads above the water in a market of increasing responsibilities and taxes. Some businesses are cheering the reforms, but most will be heaving a sigh of relief.