What are Small Business Rates?

Business rates are a form of tax levied on non-domestic properties in the UK, such as shops, offices, pubs, warehouses, and factories. This tax is a crucial source of revenue for local councils, helping to fund essential public services like education, waste management, and social care. Calculated based on the property's rateable value, which is an estimate of its open market rental value, business rates can represent a significant expense for businesses. Understanding how business rates work, who is liable, and the available reliefs, such as Small Business Rate Relief, is essential for managing business finances effectively. Here’s an in-depth look at business rates:

Types of Properties Charged Business Rates         

1. Shops: Includes retail outlets, boutiques, and convenience stores.

2. Offices: Offices of various sizes, including those used by professionals and administrative purposes.

3. Pubs and Restaurants: Places where food and drink are sold to the public.

4. Warehouses: Buildings used for storing goods and products.

5. Factories: Industrial buildings where manufacturing takes place.

6. Holiday Rental Homes or Guest Houses: Properties used for short-term accommodation.

7. Other Non-Domestic Properties: Includes any property used for non-residential purposes, such as schools, hospitals, and places of worship (if not exempt).

Who Pays Business Rates?

Property Owners or Tenants: Generally, the occupier of the property is responsible for paying business rates. In some cases, the property owner might be liable if the property is unoccupied.

Non-Domestic Use: The property must be used for non-domestic purposes to be liable for business rates.

Calculation of Business Rates

Rateable Value: The amount of business rates you pay is based on the rateable value of your property, which is determined by the Valuation Office Agency (VOA). This is an estimate of the property's rental value.

Multiplier: The rateable value is multiplied by a national multiplier (or business rates poundage) set by the government. There are different multipliers for small and large businesses.

Discounts and Reliefs: Some businesses may qualify for discounts or reliefs, such as Small Business Rate Relief or Rural Rate Relief, which can reduce the amount of business rates owed.

Payment and Administration

Billing: Business rates are billed by your local council. You will receive a rates bill, which outlines the amount you owe and payment due dates.

Payments: Payments are typically made in monthly instalments, but arrangements can be made with the local council.

Appeals and Disputes

Rateable Value Disputes: If you believe your property’s rateable value is incorrect, you can appeal to the Valuation Office Agency. This might result in a reassessment of the rateable value.

Council Communication: If you have issues with your bill or payment, communicate directly with your local council.

Exemptions and Special Cases

Charities: Properties used by charities may be eligible for 80% relief.

Empty Properties: There are exemptions or reductions for certain empty properties, but this can vary.

Managing Business Rates

Budgeting: Factor business rates into your business’s financial planning and budget accordingly.

Support and Advice: Local councils often provide support and advice on managing business rates and understanding available reliefs.

Changes to Property Use

Notifiable Changes: If there are changes in how the property is used, such as a change from domestic to business use, notify your local council as this can affect your rates.

How to Find Out More

Local Council: Contact your local council for specific information about your business rates bill, available reliefs, and payment options.

Valuation Office Agency (VOA): For information on rateable value and appeals.

Understanding and managing business rates effectively can help ensure compliance and potentially reduce your business’s tax burden.