Rent Reviews and Rating Assessments

4. Understanding Rates

4.1 All non-domestic property is subject to business rates.

  • Living accommodation – including most accommodation within business premises – is subject to council tax.
  • Business rates are normally payable by the occupier of the premises.
  • If your lease or licence agreement states that the rent is inclusive of rates, it is your landlord who is responsible for paying the rates. If the landlord defaults, the local council can pursue the occupier.

4.2 The amount you pay in rates is based on the rateable value of your premises.

The Valuation Office Agency (VOA) in England and Wales, and the Assessor in Scotland, provides summary valuations showing how your rateable value has been calculated.

  • The basic level of rateable value usually remains fixed for a five-year period. The rateable values which became effective on 1 April 2010 were based on open market rental values on 1 April 2008.
  • Any new premises or any changes to existing premises are valued at the rent they would have commanded in April 2008.
  • The next revaluation comes into force on 1 April 2015. Any national increase in rateable values should be offset by a comparable reduction in the multiplier (see 4.3).
  • The rateable value is the same, whether the premises are owner-occupied, leased or licensed.

4.3 The normal rates payable are calculated by multiplying the rateable value by the multiplier. The multiplier (sometimes called the Uniform Business Rate or UBR) usually changes each year in line with inflation.

  • For the year starting in 1 April 2013, the standard multiplier in England is 47.1p (including the Small Business Rate Relief premium of 0.9p) (see 4.4). So for a building with a rateable value of £50,000, the annual rates would normally be £23,550, but this could be subject to transitional arrangements (see 4.6).
  • A lower small business multiplier, 46.2p, is used for businesses eligible for Small Business Rate Relief (SBRR) (see 4.4).
  • Special rules apply in the City of London, which usually charges a small supplement over the standard multiplier.

4.4 Businesses in England which occupy only one main property with a low rateable value can get SBRR.

  • Eligible rate payers qualify for 100% SBRR on buildngs with a rateable value up to £6,000 and a tapering relief from 100% to 0% for properties worth up to £12,000.
  • For rateable values between £12,000 and £17,999 (or up to £25,499 in London), there is no percentage reduction but the small business multiplier is used.
  • Businesses that occupy additional properties may still be able to claim the relief on the main property, provided that the rateable value of each of the other properties is less than £2,600.
  • The process for obtaining SBRR has been simplified and you no longer have to apply for the relief.

4.5 You may qualify for other reliefs.

  • If the property (or part of the property) is empty, you may qualify for rates relief.
  • Empty commercial premises are exempt from business rates for the first three months. Industrial and warehouse buildings qualify for a further three months’ exemption. After that, full business rates are payable.
  • Listed properties and those with a rateable value of under £2,200 are exempt from empty property rate. Assessments of land are also exempted.
  • There are a number of specific reliefs for properties in rural areas and for charities and qualifying amateur sports clubs.

4.6 You receive the rate demand from your local authority each year around 1 April. You have a choice of when to pay.

  • Most businesses choose to pay in ten equal monthly instalments.

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