Local Authorities collect Business Rates on behalf of the Government, and the Government then redistributes the total amount collected nationally according to population.
Business Rates are based on the rateable value of the property, which therefore has a relationship to its rental value. This rateable value can be challenged by occupiers and owners if they feel it is incorrect by way of a Rating Appeal.
The amount of business rates payable is calculated using the rateable value and the multiplier, which is set by the Government. Different multipliers are used for England, Wales, Scotland and Northern Ireland.
Every five years the rateable values of all business properties in Wales and England are reassessed. The latest revaluation was made as at 1st April 2008 and is scheduled to take effect from 1 April 2010. Many ratepayers received details of their proposed new rateable value in the form of a summary valuation.
Rateable value may be affected by altering the premises or changes in the business locality, in which case owners or occupiers may wish to have the rateable value re-assessed.
These applied for years up to and including 2008/09. Property values can change a great deal between each revaluation and transitional arrangements helped to phase in the effects of these changes by limiting increases in bills.
Under the transition scheme, limits continued to apply to yearly increases and decreases until the full amount was due (rateable value times the appropriate multiplier).
With effect from 2009/10 there are no longer transitional relief provisions but instead the Government announced in March 2009 the introduction of a new business rate deferral scheme. This will provide relief to ratepayers facing higher than normal inflation adjustments in their 2010 bill and for those affected by the end of the 2005 transitional relief scheme.
Business Rates are not payable in the first three months a property is empty. This is extended to six months in the case of some industrial properties. After this period, rates are now payable in full unless the unoccupied property rate has been reduced by the Government by order. In most cases the unoccupied rate is zero for properties owned by charities and community amateur sports clubs. There are a number of other exemptions from the empty property rate.
Under some circumstances during major renovations and developments it may be possible to have a commercial property removed from the local rating list during the period of the works. Check with your local authority and or the local Valuation Office.
Available to ratepayers who apply to their local authority and who occupy either-
The rateable value of the property (a), or the aggregate rateable value of all properties (b), must be under £15,000 outside London or £21,500 in London on 1st April in the financial year in question, on the day which relief is being sought, and each intervening day. If the rateable value, or aggregate rateable value increases above those levels, then relief will cease from the day of the increase.
Ratepayers who satisfy these conditions will have the bill for their single or main property calculated using the lower small business non-domestic rating multiplier rather than the ordinary non-domestic rating multiplier.
Additionally, if the single or main property is shown on the rating list with a rateable value of up to £10,000, the ratepayer will receive a percentage reduction in their rates bill for this property of up to a maximum of 50% for a property with a rateable value of not more than £5,000.
Charities, Sports Clubs and non-profit making organisations may be subject to special reliefs. In addition, hardship relief is sometimes available - contact your local authority.
Individuals in mixed business and private accommodation will only pay business rates on the non domestic part and will continue to pay council tax on the private part.
If an individual offers bed & breakfast facilities they will not be liable to business rates providing they intend to offer such accommodation for not more than 6 people and they continue to live in the property at the same time and use as their main home.
Self catering holiday accommodation is subject to business rates if available for short term letting for 140 or more in a year.
A detailed Guide to Business Rates is available from the Department of Communities & Local Government - see link below.
You can also get information on Business Rates and Rating Appeals from the Valuation Office Agency's business rates home page.
The Valuation Office website now holds details (including floor areas) of all business premises which is very useful for landlords when assessing rental values at review or lease renewal.
The Royal Institute of Chartered Surveyors (RICS) is now operating a free rating helpline. The service offers a half-hour of free advice from a local rating surveyor. You can access this service by calling the RICS contact centre 0870 333 1600.
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