Businesses pay an annual commercial property tax to local authorities to help finance neighbourhood services (similar to council tax paid on residential property); the council collects rates but it is the government that decides how they are calculated. The rating valuations are changing from April for the first time in seven years, factoring in London’s rising property prices.
Strong opposition from the business community has prompted Chancellor Phillip Hammond to announce a series of government relief measures in the spring budget to the tune of £435 million, spread out over the next five years.
Councils typically start sending out bills from February onwards; here is what you need to know:
How are business rates calculated?
Business rates are calculated based on the property’s Rateable Value (RV), an estimate for the rent a property could let for on the open market. This may not be the same as your actual rent. The tax office’s Valuation Office Agency decides on the final RV figure using market rental figures from a set date – this year it will use figures from 1 April 2015. Therefore, businesses need to be aware that the rates they pay may change in April. Please note that your Rateable Value is not the actual amount you will pay – the actual payable amount is known as the Rates Payable.
Do I get any relief?
Find out if your business is eligible for a discount, for example if your business only uses one property and the Rateable Value comes to less than £12,000. The threshold for Small Business Rates Relief has been increased so some small businesses might be better off than before under the revamped rules, so it is worth finding out.
To ease the pain from any uplifts, the government is phasing increases over the next five years. This is known as Transitional Relief and will limit any uplift in actual paid rates by capping the percentage amount your bill can increase. Even if your business no longer qualifies for Small Business Rates Relief under the new rules, any increase will be capped at an extra £50 a month under Hammond’s new measures.
The government is also putting in place a new £300 million fund for local authorities, allowing them to give “discretionary relief” for the hardest hit businesses in their areas. Workspace expects that some customers will see no increase or limited increases in business rates bills, thanks to Small Business Rates Relief.
What if I think I’m being overcharged?
Your bill has arrived in the post and it looks out of line. What can you do? You still have to pay it, but every business has the right to query the Rateable Value with the Valuation Office. If you can’t come to a mutual agreement you have the right to appeal. It is advisable to seek professional advice first, though; rating valuation is a niche area so exercise caution if employing a no-win no-fee adviser on your company’s behalf. Check the adviser complies with the RICS Code of Practice, or call the RICS rating helpline on 02476 868 555 for half an hour of free advice from a local chartered surveyor specialising in business rates.
The appeals system is also changing, with the introduction of a system of fines and fees under the new ‘Check, Challenge, Appeal’ process. This means that businesses who are unable to come to an agreement with the valuation office and decide to appeal, will have to pay a fee to do so, and anyone found to be providing misleading information can be fined.
Spring budget relief measures
Any company that no longer qualifies for Small Business Rates Relief because of the revaluation will have their increase in monthly bills capped at £50.
A new £300 million fund for local authorities will permit them to give “discretionary relief” for the hardest hit businesses in their area.
Pubs will get a helping hand, with a £1,000 discount on business rate bills for all pubs with a Rateable Value of less than £100,000. This represents 90% of all UK pubs.
Read up on business rates…
The government has a handy introduction to get to grips with business rates and how they affect you and your company here.
Work out how much your business will be charged using an online DIY government calculator. It will first work out the Rateable Value for your property in a matter of seconds, and then estimate the business rate (the Rates Payable).
Are you a small business? Find out if your business is eligible for a discount by clicking here.
Want to query your rates bill? Find out more here.