Business Rates
Rates are cited by many of our clients as the third highest overhead behind staff costs and rent.
The 2010 Revaluation came into effect in April 2010 and property occupiers should understand how this affects them.
Rateable Value
Rateable Values are set independently by the Valuation Office Agency. Revaluation takes place every 5 years and the last full revaluation of all Rateable Values took effect from 1 April 2010.
Rateable Values were updated based on rental levels on the previous statutory valuation date of 1 April 2008.
Rateable Values can be appealed by businesses who feel they are unfair.
Uniform Business Rate 2010/11
The Uniform Business Rate is set each year by the government. At a revaluation, the Uniform Business Rate is adjusted to ensure that in broad terms no more is raised in real terms from business rates from List to List. As the total Rateable Value has risen, the multiplier for 2010/2011 has been adjusted downwards from 48.5p in 2009/2010 to 41.4p for 2010/2011. The rate in the £ for “small businesses” has fallen from 48.1p in 2009/2010 to 40.7p for 2010/2011.
Rates Liabilities 1 April 2010
Rates liabilities can be calculated by multiplying the 2010 List Rateable Value by the Uniform Business Rate for 2010/11.
The resulting liabilities may then be adjusted for any qualifying reliefs or adjustments under the government’s transitional arrangements.
Business rates reliefs
Rateable values are reviewed every five years as part of a revaluation exercise. The last revaluation took place on 1st April 2010. As a result of that valuation the small business rate relief thresholds were increased.
In England small businesses are generally entitled to small business rate relief if they only occupy one property and the rateable value of their premises is less than £18,000 (£25,500 in London). Additional properties with rateable values below £2,600 are disregarded when considering applications for small business rate relief. However, the rateable value for such properties are included in determining whether the threshold criterion has been met. These rateable value levels for relief are for 2010/11 onwards.
In small business rate relief the amount of relief depends on the rateable value.
If the rateable value of the property is less than £6,000, the rates are calculated using the small business multiplier, which for 2010/11 is 40.7 pence, and reduced by 50 per cent.
If the rateable value is from £6,000 to £11,999, the reduction decreases on a sliding scale of 1 per cent for every £120. For example, if the rateable value is £9,000, the rates are reduced by 25 per cent.
If the rateable value is from £12,000 to £17,999 (£24,499 in London), rates are also calculated using the small business multiplier. For 2010/11, the small business multiplier is 40.7 pence (instead of the standard 41.4 pence).
Note that previously, you had to reapply for small business rate relief at the start of each valuation period. You no longer have to do this.
If you become ineligible for the relief, you must notify your billing authority.
If the rateable value of your business premises increased as a result of revaluation, your billing authority will adjust the relief accordingly.
Impact of the 2010 Budget on Small Business Rate Relief
Between 1st October 2010 and 30th September 2011, eligible ratepayers will receive small business rate relief at 100 per cent on properties up to £6,000 (rather than 50 per cent), and a tapering relief from 100 per cent to 0 per cent for properties up to £12,000 in rateable value for that period.
There are no other adjustments to the scheme and the eligibility criteria will remain the same. Your local billing authority will contact you about how this may affect you, but you should continue to pay your rates as per the bill you have received until a new bill reflecting the change is issued.
Contact your local authority if you need further advice.
Empty Properties
Since 1 April 2008, all empty business properties have been exempted from business rates for the first three months that they are empty. Industrial and warehouse properties qualify for a further three months' exemption from business rates. After that, full business rates are payable.
The period of exemption from business rates for empty properties with a rateable value of less than £15,000 was extended for one year from 1st April 2009 until 31st March 2010. The Chancellor has further extended empty property relief in 2010/11 so that all empty properties with a rateable value below £18,000 are exempted from business rates. However, outstanding rates liability incurred on or before 31st March 2009 is still payable.