Business rates are a necessary evil for business owners of all shapes and sizes. It is however, a tax that is not always well understood. Let’s take a look at how business rates work, why they exist, and how you, as a business owner, can make sure you are only paying what you need to.
What are business rates?
Business rates, also known as national non-domestic rates or NNDR, are a tax payable on all business and non-domestic properties. The rate you are asked to pay is set by central government, so the local council have no say over the figures, though the local council is responsible for collecting it on the government’s behalf.
Your local council sends out your annual bill in February or March every year to cover the amount due for the following tax year (starting in April).
How are business rates calculated?
Annual liability is calculated using the current Rateable Value of the building, multiplied by the National Rate Multiplier. Any surcharges are then added and transitional reliefs (and/or Small Business Rate Relief where applicable) are subtracted, giving a final figure to pay.
The Rateable Value is set by the Valuation Office Agency, a part of HMRC, and represents an open market annual rent as it would stand on the premises on a set date. This figure is not always entirely accurate, as it cannot necessarily take into account any individual factors that may affect the premises’ value. Occupiers and owners can, therefore, appeal against the Rateable Value of the premises if they believe it is inaccurate.
The Rate Multiplier is set each year based on the Consumer Price Index (previously, it was set on the Retail Price Index). In fact, there are two Rate Multipliers: one for small business rates and one standard multiplier. The small business rate is lower, and the supplement on the standard multiplier pays for the government’s small business rate relief scheme.
Find out how to estimate your rates here.
Do I have to pay business rates?
Certain properties are exempt, such as agricultural land and buildings, those used for religious worship or for welfare of disabled people. There are reliefs on certain properties in rural locations, on small businesses and non-profit organisations.
If you run your business out of a room in your home, you will not be required to pay. Business rates also do not need to be paid on empty buildings for three months after they are vacated but, in most cases, after three months they’re liable to pay full rates again.
If you are a client in our Earlsfield or Crawley Needspace? offices, your business rate will be taken care of by us, so you don’t have to worry about it at all.
To explore the latest figures for business rates in your area, for further information, or to discover your premises’ rateable value, visit the links below:
If you would like to find out more about situating your business in an office where business rates will never be a concern, drop the team at Needspace? a line and we’ll be happy to chat with you about what’s available.