Business owners do not always know what responsibilities they have and are often afraid of having to pay out on high business rates bills. We would like provide clarity on this matter and help make it easier to understand if you’re a small business starting on your journey.
Most commercial property have a Rateable Value. This is set by the Valuation Office Agency, and is reviewed every 5 years. This is the equivalent at looking at the market rent, at a given time. This value is then used, to set the Business Rates, that a business pays (tax). This is like the Council Tax you’d expect to pay on residential properties.
When you look at a property, and see the Rateable Value, you use the Uniform Business Rate (UBR) multiplier to work out the Business Rates for that year. The UBR changes each financial year, the Rateable Value can change every 5 years.
It is also useful to know that if you are a small business and only have ONE property that you operate your business from, you may be eligible for SMALL BUSINESS RATES relief, whereby you could potential pay zero for the year. The general rule is if the Rateable Value is under £12,000.
Due to the Coronavirus pandemic, the 2020 March Budget provided for retail businesses an exemption on not having to pay business rates for the financial year 2020-2021. This exemption was expanded to retail, leisure and hospitality businesses, with no limit on the Rateable Value of the property. Other criteria and conditions may apply, but you can find the information here (Government link that opens in a new tab).
As small business owners, you might not have all the information at hand, but by seeking professional advice such as a RICS Surveyor like us, we can help guide you. We helped a client recently who was advised by the local authority that he would have to pay the business rates if he purchased the property for his retail business. he spoke to us afterwards and we advised him that the local authority was inaccurate and he would be eligible for zero rates. This was a potential game-changer.
Knowing that your business may be exempt until March 2021 can affect your business cashflow and business strategy, so we hope it has been useful to read this blog.