Businesses and organisations occupying non-domestic premises pay business rates. These help fund local services provided by local authorities, such as the police and the fireservice. If you use a building or part of a building for business, you will usually have to pay business rates.
Quote: "To tax and to please, no more than to love and be wise is, not given to men."
Edmund Burke 1729-97, On American Taxation 1775
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 most recent revaluation came into effect on 1 April 2005. 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.
Property values can change a great deal between each revaluation. Transitional arrangements help to phase in the effects of these changes by limiting increases in bills. Under the transition scheme, limits continue to apply to yearly increases and decreases until the full amount is due (rateable value times the appropriate multiplier).
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 rennovations 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-
(a) one property, or
(b) one main property and other additional properties providing these additional properties each have a rateable value of less than £2,200.
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.
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)
Page content supplied by: Maurice Patry FCA of www.landlordstax.co.uk
