Calculating Business Rates

Business rates, also known as non-domestic rates, are a tax on the occupation of non-domestic property. They are a significant source of revenue for local authorities in the UK, and are used to fund a range of local services. Calculating business rates can be a complex process, and it is important to have a good understanding of the key terms and vocabulary involved.

Rateable Value

The first key term to understand is rateable value. This is the value of a non-domestic property, as assessed by the Valuation Office Agency (VOA), and is used as the basis for calculating business rates. The VOA uses a range of factors to determine the rateable value of a property, including its size, location, and the type of business that is carried out there. The rateable value is usually reassessed every five years, in a process known as a revaluation.

Multiplier

The multiplier is the second key term to understand. This is a figure set by the government each year, which is used to calculate the business rates payable on a property. The multiplier is applied to the rateable value of the property, to give the amount of business rates that are payable. There are two multipliers: the standard multiplier, and the small business multiplier. The standard multiplier is higher, and is used for properties with a rateable value of £51,000 or more. The small business multiplier is lower, and is used for properties with a rateable value of less than £51,000.

Business Rates Relief

Business rates relief is a reduction in the amount of business rates that are payable on a property. There are a number of different types of relief available, including:

* Small business rate relief: This is available to businesses that occupy only one property, with a rateable value of less than £15,000. * Rural rate relief: This is available to businesses that are located in rural areas, and have a rateable value of less than £16,500. * Charitable rate relief: This is available to charities and other qualifying organisations, and can result in a reduction of up to 80% in the amount of business rates payable. * Retail discount: This is a discount of up to one third on the business rates payable for retail properties with a rateable value of less than £51,000, for the financial year 2020/21.

Transitional Relief

Transitional relief is a type of relief that is designed to help businesses that would otherwise face large increases in their business rates as a result of a revaluation. Transitional relief limits the amount by which a business's rates can increase or decrease in any one year, following a revaluation. The amount of transitional relief that is available depends on the size of the property, and the amount by which the rates would otherwise have changed.

Unoccupied Property Rating

Unoccupied property rating is a charge that is payable on non-domestic properties that are empty. The amount of unoccupied property rating that is payable depends on the rateable value of the property, and the length of time that it has been empty. For the first three months that a property is empty, the rate of unoccupied property rating is 100% of the business rates that would otherwise be payable. After three months, the rate of unoccupied property rating reduces to 50%.

State Aid

State aid is a term that is used to describe financial assistance that is provided by a government to a business. State aid is subject to strict rules, and businesses that receive state aid may be required to repay it if they are found to have breached these rules. Business rates relief can be considered to be state aid, and businesses that receive business rates relief may be required to comply with state aid rules.

Material Change of Circumstance

A material change of circumstance is a change in the circumstances of a property that could affect its rateable value. Examples of material changes of circumstance include the construction of new buildings, the demolition of existing buildings, and changes in the use of a property. If a business believes that there has been a material change of circumstance that has affected the rateable value of their property, they can apply to the VOA for a review of their rateable value.

Backdated Business Rates

Backdated business rates are business rates that are payable for a period before the date on which they were actually billed. Backdated business rates can arise if there has been a delay in issuing a business rates bill, or if there has been a change in the rateable value of a property. Backdated business rates can be a significant financial burden for businesses, and it is important to be aware of the risk of backdated business rates when negotiating a lease or purchasing a property.

Empty Property Exemptions

There are a number of empty property exemptions that are available, which can reduce or eliminate the amount of unoccupied property rating that is payable on a property. Examples of empty property exemptions include:

* Listed buildings: Properties that are listed as being of special architectural or historic interest are exempt from unoccupied property rating for up to six months. * Properties that are undergoing major repair works: Properties that are undergoing major repair works are exempt from unoccupied property rating for up to 12 months. * Properties that are subject to a planning restriction: Properties that are subject to a planning restriction that prevents them from being occupied are exempt from unoccupied property rating.

Material Valuation Date

The material valuation date is the date on which the rateable value of a property is assessed. The material valuation date for a property is usually the date of the most recent revaluation. However, if there has been a material change of circumstance that affects the rateable value of a property, the material valuation date may be the date on which the change occurred.

Material Day

The material day is the date on which a business rate bill is issued. The material day is important because it determines the amount of business rates that are payable for the period covered by the bill. The material day is usually the date on which the bill is issued, but it can also be the date on which the bill is due to be paid, or the date on which the liability to pay business rates begins.

Material Increase in Rates

A material increase in rates is an increase in the amount of business rates that are payable on a property as a result of a revaluation. If a business believes that there has been a material increase in rates, they can apply to the VOA for a review of their rateable value.

Material Decrease in Rates

A material decrease in rates is a decrease in the amount of business rates that are payable on a property as a result of a revaluation. If a business believes that there has been a material decrease in rates, they can apply to the VOA for a reduction in their business rates.

Rateable Occupation

Rateable occupation is the occupation of a non-domestic property for the purpose of carrying out a business. The occupation of a property for the purpose of living in it is not rateable occupation.

Rate Payer

The rate payer is the person or organisation that is liable to pay business rates on a property. The rate payer is usually the occupier of the property, but can also be the owner of the property if it is unoccupied.

Void Period

A void period is a period during which a property is empty and unoccupied. Void periods can occur when a property is between tenancies, or when a business is closed for renovations or other reasons. During a void period, the rate payer is usually liable to pay unoccupied property rating.

Void Period Exemption

A void period exemption is an exemption from unoccupied property rating that is available during a void period. Void period exemptions are usually only available for a limited period of time, and the rate payer may be liable to pay unoccupied property rating after the exemption period has ended.

Void Period Extension