business rates

Business Rates/Council Tax

Business premises often incorporate flats or living accommodation.

Council tax is payable on the living accommodation and business rates are payable by the occupier of the business premises.

Most leases for business premises provide for the tenant to pay council tax and business rates.  Some leases or licences provide for rent to be inclusive of rates.  In that case, the landlord is responsible for payment of rates.  Should the landlord default, the tenant may be responsible directly to the local authority.

How are Business Rates Assessed?

The amount that is due in business rates is based upon the rateable value of the premises.  The Valuation Office Agency provides valuations showing the rateable value for each commercial property in the country.  The rateable value made for individual premises may be obtainable from the local authority or from http://www.voa.gov.uk/ or http://www.businesslink.gov.uk

How are Rateable Values Assessed?

The rateable value is based upon market rental value and is reassessed every five years.  The present valuation list became effective on 1st April 2005 and is based upon rental values on 1st April 2003.  New premises or altered premises are valued as at the 2003 date.

Rates payable are calculated by multiplying the rateable value by the rate multiplier.  The multiplier or Uniform Business Rate increases each year in line with inflation.  The rate is available each year from the local authority or from the valuation office.

There is a lower small business multiplier.

Small Business Rate Relief

Where the rateable value of premises is up to 5,000 a 50% relief is applicable.  Where the rateable value is between 5,000 and 9,999, the percentage reduction decreases on a sliding scale by a 1% for every 100.

For rateable values between 10,000 and 14,999 (or up to 21,499 in London) there is no percentage reduction but the small business multiplier is used.

Small business rate relief is not automatic.  It is necessary to apply to the local authority. 

Other Reliefs

If the property is partly or wholly empty, it may qualify for rates relief.

The relief for empty premises is 100% of the occupied rate for the first three months, followed by 50%.  Industrial and storage premises remain at 100%.

Listed premises and those with a rateable value of less than 2,200 are exempt from empty property rate.

There are specific reliefs for rural property, charities and some sports clubs.

When are the Rates Payable?

The local authority sends the rate demand on 1st  April each year.

Most businesses choose to pay the rates in ten equal monthly instalments.  It is also possible to pay the whole amount immediately or pay half immediately and the remainder on 1st October.

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Appealing Against Rates

There are two main grounds for appeal against the rateable value. 

1.   That the rateable value of the premises is higher than the open market rental value on the 1st of April 2003. 

2.   That  the premises are adversely affected by some change in circumstances such as alterations to the property or alterations to the local area.

The appeal is considered by the local Valuation Officer.  The applicant may be represented by his/her own valuer.

Your valuer will assess the rateable value of the premises and report upon the advisability of making an appeal.  Following an appeal he or she will discuss the case with the Valuation Officer and negotiate a settlement.

If a settlement cannot be reached, the appeal is referred to a Valuation Tribunal.  Your valuer would make submissions to the Tribunal on your behalf.

Rates Refund

Following a successful appeal, a refund is made which is the difference between the rates payable on the original rateable value and the amended one.  Interest is payable on the refund sum.

Preparation and Strategy

It is necessary for the valuer to carefully measure the premises in accordance with the standard method of measurement to assess the rateable value.  It is also necessary to obtain details of comparable property lettings from the valuation date, including the information relating to the subject property and the terms of that letting.  The information is useful in assessing the rateable value, making the appeal and negotiating with the Valuation Officer.

James Flynn Chartered Surveyors?

We are an independent firm of chartered surveyors and have been advising clients on all aspects of property value and condition since 1980 from our offices in London, Surrey, Hampshire, Sussex and Kent.  We mainly cover the London and South East region but travel further afield when this is requested.

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To contact us please select from the appropriate area link below:

London  | Surrey | Sussex | Hampshire | Kent

 

 

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