BUSINESS RATES

UNDERSTANDING BUSINESS RATES

Business rates are applied to all non – domestic properties. Living accommodation (inclusive of most accommodation contained within business premises) is subject to Council Tax.

As the occupier of a premises, you are responsible for paying business rates unless your lease or licence states that the rent includes the rates, if this is the case, the landlord should pay the business rates. Should the landlord default, the occupier can be pursued by the council for payment.

The amount payable is arrived at by using the rateable value of your premises. Rateable values are fixed by the Valuation Office Agency (VOA) in England and Wales or the Assessor for premises in Scotland. These bodies can provide summary valuations detailing how your rateable value has been calculated (www.voa.gov.uk). The basic levels of rateable value usually remain in force for a period of five years. Rateable values which became effective on 1 April 2011 are based on open market rental values as of 1 April 2008. Any new premises or changes to existing premises are valued at the rate they would have attracted in April 2008. The next revaluation, therefore, will come into force on 1 April 2015. Any national increase in rateable values should be offset by a comparable reduction in the ‘Multiplier’. Rateable value remains the same no matter if the premises are leased, owner-occupied or subject of a licence the normal rates are calculated by multiplying the rateable value by the ‘multiplier’.

The multiplier or ‘Uniform Business Rate’ (UBR) usually changes year by year in line with inflation. For example – for the year commencing 1 April 2011 the standard multiplier used in England is 42.2p (this includes the ‘Small Business Rate Relief’ premium of 0.7p) therefore a building with a rateable value of £50,000 would attract annual rates of £21,000 if not subject to any transitional arrangement. A lower multiplier of 40.7p  is used for properties eligible for ‘Small Business Rate Relief’ (SBRR). Special rules are applicable for the City of London who levy a small supplement above the standard multiplier. In England, businesses who occupy only one main property with a low rateable value can get SBRR – buildings with a rateable value of up to £6,000 will be eligible for 100% relief. Properties with a rateable value of between £6001 and £12,000 will be eligible for relief on a sliding scale of between 100% and 0%.  Businesses with a rateable value of between £12,000 and £17,999 or up to £25,499 in London, attract no percentage reduction but the ‘Small Business’ multiplier is used. 

Relief may still be claimable on the main property in the case of businesses that occupy additional properties, provided that the total rateable value of all the premises is less than £18,000 or £25,000 in London. Apart from the value of the main property, each of the other premises must have a rateable value of less than £2,600. SBRR has to be applied for once every five year valuation period – it is not automatically granted. In addition the Local Authority must be informed of any change of circumstance that is likely to affect entitlement to SBRR – for example moving premises.

Empty or part empty properties may qualify for rates relief – for instance, since 1 April 2008 empty commercial premises are exempted from business rates for the first three months. Industrial and warehouse premises are exempted for a further three months, full business rates are payable after this.  From 1 April 2011 the rateable value threshold below which empty properties are exempted from business rates will revert to £2,600. Properties which are Listed and those with a rateable value of below £2,200 are exempted from empty property rate. Assessments of land are also exempt.

Specific reliefs exist for properties in rural areas, qualifying amateur sports clubs and charities. Fusion Estates can offer professional help and advice and assist your business if you think you may qualify.

PAYMENT OF BUSINESS RATES

Your local authority will send a rates demand each year about the 1^st of April. Most businesses chose to pay in ten equal monthly payments.