A Small Business Guide To Business Rates

A Small Business Guide To Business Rates

Business rates, also known as non-domestic rates, are one of the UK’s oldest taxes and can represent one of the biggest overheads for a business, therefore it is important to understand what they are, who needs to pay them, and how they were affected by the coronavirus pandemic.

We also initially explore the current information surrounding the 2021 Business Rates Review.

Read on the find out all-things business rates.

 

Business Rates Review 2021 – What Your Small Business Can Expect

The government has offered countless means of support to businesses, to counter the economic impact of the Covid-19 outbreak. As part of this, a business rates holiday (100% discount) for eligible properties in the retail, hospitality, and leisure sectors was made a part of this initiative.

This discount expired on June 30th 2021, so now, from July 1st 2021 until March 31st 2022, businesses will be discounted by two-thirds, subject to a cap of £2m per business for companies whose premises were forced to close during the pandemic, and £105,000 for those who remained open.

The Spending Review also confirmed that the business rates multiplier would be frozen in 2021-22, saving businesses in England £575 million over the next five years.

There has however been concern that the system has been overcomplicated for some time now, but Rishi Sunak has announced that the business rates review will be published this autumn.

This review has been called with the aim that the “businesses rates system in England will be made fairer and more streamlined with more frequent property revaluations”.

To provide an insight, some of the reasons this review has been called for:

  • The tax take (£26bn) to be lower with rates to be reduced across the board
  • A reduction in the multiplier (the UBR used to calculate rate bills)
  • A reform of the Reliefs system
  • Some extension of empty rates relief
  • Plant and machinery clauses to be reviewed regularly to reflect the modern green age
  • More frequent revaluations and the removal of the transitional relief system
  • Overhaul of CCA and the appeals system and greater transparency in working with the VOA
  • Consideration of other taxes to reduce the burden of business rates

This is the information currently available, but for all up-to-date information surrounding the business review, visit Gov.uk.

 

What Are Business Rates?

Business rates can be roughly defined as the tax paid for the occupation of a non-domestic property. They approximately correspond to 50 per cent of the annual rent of the property. Business rates are based on a specific value, known as “rateable value”.

 

How Much Are Business Rates?

Rateable value represents the rent a property could have been let for on a certain day set in law. It may not be the actual rent payable on this date as the law makes assumptions based on the property’s condition.

The rateable value is not the amount that you pay but is used by councils to calculate your rates bill. What is worth noting is that depending on individual circumstances, a ratepayer may be eligible for a rate relief.

 

Who Pays For Business Rates?

Business rates should be paid by the occupier of the premises, which is usually either the landlord or the tenant. The tenant and landlord can decide who is responsible to make the payment.

 

How Are Business Rates Calculated?

You can check the ‘rateable value’ of your property - this is set by the Valuation Office Agency (VOA) and used by your local council to calculate your business rates bill, by working through the steps of this form on this page of the Gov.uk site.

 

Do You Pay Business Rates If Your Property Is Empty?

Properties that are empty still need to pay the bill that is due.

However, some properties can get extended empty property relief. Some examples:

  • Industrial premises are exempt for a further three months
  • Listed buildings – until they’re reoccupied,
  • Buildings with a rateable value under £2,900 – until they’re reoccupied
  • Properties owned by charities – only if the property’s next use will be mostly for charitable purposes

Rating experts can advise you and check that you are paying the correct amount, you can also look at the business premises and business rates section on gov.uk.

 

What is Small Business Rate Relief And Do You Qualify For It?

Generally speaking, you can get Small Business Rate Relief if:

  • Your property’s rateable value is less than £15,000
  • Your business only uses one property – you may still be able to get relief if you use more

To find out whether you qualify and to apply for small business rate relief, you can contact your local council.

 

Who Sets Business Rates?

Business rates are set by the central government, and more specifically the Valuation Office (VOA), which is an agency of HMRC. The VOA calculates your business rates based on “rateable value” (RV).

 

Which Properties Are Exempt From Business Rates?

Certain properties are exempt from paying business rates, these can include:

  • Agricultural land and buildings, including fish farms
  • Buildings used for training or welfare of disabled people
  • Buildings registered for public religious worship or church halls

If your property is in England, you can report that you think it should be exempt using the Valuation Office Agency service or check this Gov.uk exempted buildings and empty buildings relief list.

 

How To Register For Business Rates

To register for business rates, you need to get into contact with your local council. However, business rates can be very technical and confusing when appealing, therefore we suggest if you need help and advice, to get in contact with a qualified ratings expert to assist you.

This logic is applicable to business planning, too. It’s best to leave it to the experts to ensure that your business plan is concisely written, with all key requirements in mind, and in a format that is investor/funder/shareholder ready.

Get in touch to find out more about how cbm can support your business. To speak with one of our expert consultants please call us on 01604 420 420 or complete the form on the right.

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