Business rates are a tax levied on the occupation of property and ownership of empty buildings. All non-domestic properties need to pay business rates, similar to individuals paying council tax on private residences. Business rates are calculated by multiplying the rateable value of your non domestic property (worked out by rental value) by the correct multiplier (also known as the UBR or rate in the pound) set by the government. The multiplier is increased each year by the September RPI rate of inflation to ensure that the Government consistently collects the same amount of money each year in real terms. You can check your rateable value on the Valuation Office Agency website.
A revaluation of business rates is carried out every 5 years, with the next revaluation due in 2017 (although this is actually the delayed 2015 valuation). It is expected that all businesses will find out their new rateable values between September 2016 and January 2017. Whilst revaluations can result in the rateable values dropping (as they reflect movements against the National Average) it is widely expected that for most businesses there will be an increase in value. This is likely to be especially marked in London and the South East of England, whilst areas such as Liverpool and Bradford may well see a decrease.
There is some good news for smaller businesses as the former Chancellor, George Osborne, listened to petitions from the Federation of Small Business (FSB) and announced the following reforms at the last budget.
From April 2017:
- Businesses occupying a single property with a Rateable Value of less than £12,000 will now pay no rates at all.
- Businesses occupying a single property with a Rateable Value between £12,000 and £15,000 will be given tapered relief.
- Businesses occupying properties with a Rateable Value of between £15,000 and £51,000 will be eligible for the small business multiplier for each such property.
- Only businesses with a rateable value of over £51,000 will now pay the higher rate.
The above changes were a huge victory for the FSB and their members who campaigned on these issues for many years. They mean that over 600,000 small businesses now won’t pay any business rates, giving them a saving of more than £6,000 a year, while a further 250,000 firms will also see their rates cut.
To prevent businesses being too badly affected by changes in their rates bill, the government has introduced a transitional relief system which limits the percentage increase any business can face in any one year, although the government have yet to announce what the new transitional relief system will look like, but it will mean that any increase is likely to be tapered over a five year period.
How to appeal?
From 2017, the government is introducing a new system that makes it much tougher to appeal. If you would like to appeal against your business rates bill you must be able to supply your reasons with evidence to support your statements. There are many reasons you may want to appeal, including an incorrect valuation or you may have a change to your property that isn’t shown in the rateable value. A full list for grounds to appeal can be found on the government website here.
Local authorities are able to grant discretionary relief to struggling businesses. If your rates bill is likely to bring the future of the business into question, it may be worth thinking about how you would prove this to your local authority.
Other reliefs and assistance are available to small businesses, including rural relief and enterprise zone relief, but these only apply in special circumstances. You can find out more information on the government website here.
Article produced with thanks to the FSB.
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