Business rates are a tax charged on most non-domestic properties including pubs, warehouses, shops, offices, stadiums, factories, wind turbines, golf courses and so on. Only a few types of properties are exempt from business rates including certain agricultural properties and properties used for welfare purposes. If any property is used or part-used for non-domestic purposes, the Valuation Office Agency (VOA) will bring the property into the rating list with a ‘rateable value’. A property’s rateable value is the hypothetical open market rental value of a property and if it is a commercial premises, business rates will need to be paid. The amount of business rates payable will be calculated using the Uniform Business Rates Multiplier (UBR Multiplier) unless certain business rates reliefs or exemptions are applied to the bill such as Small Business Rates Relief (SBRR). Sometimes no business rates will be paid if the property is vacant or under certain conditions.
The local council will send the business rates bill to the ratepayer in February or March of each year. The rateable value will be determined by the Valuation Office Agency. If you think your bill is wrong, you or your agent can appeal by logging into the Government Gateway business rates section and registering as the ratepayer. You can then submit applications to appeal your business rates. This is known as the Check, Challenge, Appeal (CCA) process. If your property is in Wales you do not need to Government Gateway register for business rates to appeal your rateable value.
The Valuation Office Agency may ask you to provide information about your property including whether the property is freehold or leasehold, the rent paid at the Antecedent Valuation Date (AVD) and your turnover so that it can work out your rateable value. At the next business rates revaluation, the Valuation Office Agency will be adjusting every commercial property rateable value to reflect both physical changes that the VOA are aware of, and any rental changes in the property market. The most recent revaluation came into effect in England and Wales on 1 April 2017, based on rateable values from 1 April 2015.
The standard and small business multipliers are also adjusted at each business rates revaluation along with phasing of any business rates increases known as ‘transitional relief’. There is also another relief which can be applied, the aforementioned Small Business Rates Relief (SBRR) which is downward phasing of the business rates payable amount for any rateable value under £15,000 unless the ratepayer occupies multiple properties with a total rateable value in excess of £20,000 in England and £28,000 in London. If a property is £12,000 in rateable value or below and it is the ratepayer’s only premises, then no business rates are payable.
Your business rates could also change if you increase or decrease the floor areas or if the survey data relating to your floor areas held by the Valuation Office Agency (VOA) is found to be incorrect. If you split, sublet or merge two properties that could also affect the rateable value and cause an increase or decrease in business rates payable, this is known as the quantum allowance. Another common way in which business rates can be reduced is if a premises is affected by local disruption such as building works, roadworks, restricted access and even the impact of things like the smoking ban and Covid-19. This is known as the Material Change of Circumstances (MCC) allowance. Any reduction of your business rates valuation will be applied either automatically by the Valuation Office Agency (VOA) or more likely through an appeal or application submitted by your agent into the Check, Challenge, Appeal business rates portal.
For most pubs and licensed trade businesses the Valuation Office Agency works out the property’s rateable value based on an anticipated level of trade that could be expected if the business was operated in a reasonably efficient way, under good management. This is known as ‘fair maintainable turnover’ (FMT) and it considers the type of pub, location and services offered i.e. food, beverages, accommodation, bar games etc. The VOA then looks at the rent and turnover and applies a percentage to work out the rateable value. The VOA consults with the British Beer and Pub Association and publishes a ‘pub guide’ which contains guidelines for the percentages to be applied when calculating rateable value for different types of pubs and licensed premises. It is worth mentioning pubs, hotels and other licensed premises business rates are one of the most contentious areas of rating due to the fair maintainable turnover basis of their valuations for business rates.
For self-catering and holiday let type accommodation (including Air B&B) your property will be “rated” and you will be required to pay business rates unless the property is available to let for short stays of no more than 140 days per year in England and the same is applied in Wales with the exception that the property can be available for 140 days but must only actually be let for 70 of those 140 days. The Valuation Office Agency when assessing rateable value for these types of property will consider the size, type, location, quality, and an estimate of the expected trade. It is especially important to review the business rates and appeal if you have been over-assessed for a holiday let or accommodation type rateable value, due to the fact that many of these smaller assessments can be reduced to under £15,000, which qualifies them for small business rates relief which can result in heavily discounted or even zero business rates payable.
CPRA are national business rates specialists covering all rating matters and our chartered surveyors are experts in Check, Challenge, Appeal and negotiating with the Valuation Office Agency. We can often reduce the rateable value of a property and therefore the business rates payable for those premises significantly through CCA appeal work and representing the ratepayer at Valuation Tribunal if required. If our clients qualify for Small Business Rates Relief (SBRR), Retail Business Rates Relief or any other business rates reliefs or exemptions we can advise them on how to claim.
We are currently preparing our clients for the next 2023 business rates revaluation. If you would like to check that you are paying the correct amount of business rates or appeal your rateable value please contact our business rates department on 020 7770 8000 or email email@example.com. We would be delighted to advise you on minimising your business rates costs. Our initial and specialist business rates advice is free and without obligation.