What are business rates?

Business rates, also known as non-domestic rates, are a tax levied on those responsible for commercial property. If you occupy a building, or part of a building, that you use for non-domestic purposes, you’ll most likely be required to pay business rates.

Your local council will send out and collect business rates bills each year. The amount owed will depend on the “rateable value” of the property. Currently, this is its rental value on 1 April 2008, based on an estimate by the Valuation Office Agency (VOA) and this is re-valued every five years. At revaluation, the government adjusts the value of business rates to reflect changes in the property market.

In April 2017, the next revaluation will come into force.

Discounts on business rates – do you qualify?

Some properties are eligible for discounts from the local council on their business rates. Charities are the obvious example of where relief may apply but there are also criteria for relief for properties located in rural areas (with populations of less than 3,000), for small businesses which use only one property and the rateable value is less that £12,000 and, finally, if you move to or set up business in an ‘enterprise zone’.

Changes to the property that affect business rates:

It is important to tell the VOA about a ‘material change’ to your property as any changes not reported may result in you paying more than you should. A material change is a physical change to an area of property, or to the way a property is used. These changes can include:

  • Changes to the property itself, or how the property is used;
  • New developments in the area; or
  • New roads or changes to access routes.

What if you do not agree with your valuation?

You can appeal against the rateable value set at revaluation if, for example, the valuation was wrong; there’s been a change to your property or area that should be shown in the rateable value; a change made to the valuation by the VOA is wrong or hasn’t been made or your property’s been incorrectly split into more than one listing or combined with others into a single listing.

What we suggest:

We suggest that you review your draft valuation online and tell the VOA if any details are incorrect, before your local council calculates your business rates bill from 1 April 2017. It is important to check your draft valuation as failure to check those details may result in you paying an incorrect amount in business rates.

For further information please contact a member of our Commercial Property team.

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