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Business Rates

Business rates are a tax based on the rateable value of the property, reflecting its rental value. These rates often change depending on any alterations to the building or if there's a change in the surrounding area.

Most business property has a rateable value and is assessed for business rates. Where business premises are combined with living accommodation, such as a flat above a shop, the property is known as a 'composite hereditament'. In these cases you will pay business rates on the business element of the property and council tax on the living accommodation. Properties exempt from business rates include: churches and most places of recognised worship, agricultural land and buildings, and fish farms. Some properties used mainly for disabled people, public parks and some businesses working within them.

How are business rates calculated?

There are two main factors: The rateable value of the property and the level of the uniform business rate (UBR). Multiply one by the other and in theory you would have the annual amount of business rates. But there is a catch. Increases (or decreases) in business rates may be phased in over time; the amount actually payable could be below or above the figure this sum produces. The Valuation Office Agency (VOA) of the Inland Revenue assesses the rateable value of all relevant properties in England and Wales.

Rateable value is based on the notional open market rental value that a property would get in the market on a given date. The VOA assess the open market rental value on a fixed date; usually two years before each rating list comes into force. So the revaluation on 1 April 2010 used the rental values at market prices on 1 April 2008. Although rates are based on the rental value, the VOA also takes into account the physical state of the property and any alterations made, as well as its locality. Every five years the VOA updates the rating list for each billing authority.

Can I appeal against the rateable value?

You can make an appeal against the rateable value shown on your business rates bill if:

  • You believe it to be wrong.
  • The VOA has changed the rateable value and you feel it is incorrect.
  • A change in circumstances affects the value of the property - including: - change in use of the building or a neighbouring building, changes to the actual premises, changes to the surrounding area such as construction.
    • Strafford Associates can act on your behalf in making an appeal.

If the rateable value is reduced, you should qualify for a refund (unless the effect of transitional relief means that your rate has not changed despite the reduction). You will normally receive interest on the amount overpaid, as long as your rate payments are on time and up to date.

What is the uniform business rate (UBR)?

The UBR is the multiplier that is applied to the rateable value to calculate the rates due. Each year, the UBR increases in line with inflation. For the rating year 2015/16, which runs from 1 April to 31 March, the UBR was set at a level of 49.3p in the £ for properties with an RV of £18,000 or more outside of London in England, and 48p in the pound for properties outside of London with an RV of less than £18,000 . For the 2016/17 rating year the poundage rate will be 50.3p and 49p respectively

Transition relief spreads the impact of larger changes in rateable value - limiting the rise in rates each year. The limits are different for large and small properties, and for different years. Transitional relief, whether up or down, does not apply to new properties, extensions or alterations, which were completed after 1st April 2000, despite the increase the property's value Certain categories of property may be entitled to relief from part or the entire business rate burden. Strafford Associates will be happy to undertake a ‘business rates health check’ and advise on any entitlements or reductions which might apply

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