If you are a business owner, it’s important to know your facts on how much business rates are and what reliefs you may be entitled to. Since the revaluation of business rates in 2017, it has become more difficult to understand what business rates are and how they can affect your business. So, here is a guide to understanding the basics of business rates.
You will encounter business rates when you have a property used for the purpose of business. This covers most non-domestic properties such as offices, pubs, warehouses, factories or shops. In fact, you may even get charged for using just a section of your home for non–domestic purposes. Business rates are based upon frequent revaluations done by the Valuation Office Agency who can give you more information on whether you should be paying rates.
To use business rates checker, you’ll need to understand your property’s ‘rateable value’. This is an estimation of the property’s value on the open market. You can find and check your business’ rateable value thorough this government tool. Once you have this value, you just need to multiply this by the correct ‘multiplier’ – this is based on the valuation of your property. Unless you will be receiving some form of rate relief, you should now have a solid estimation of what your business rates will be. Alternatively, you can also use this business rates calculator created by the government. For example, if your business has a rateable value of £25,000 and you use the 2019 to 2020 small business multiplier which is 49.1p. You would estimate your business rates by doing the following: £25,000 (rateable value) x £0.491p (multiplier) = £12,275 Therefore your basic business rate would be £12,275. In recent years, the calculation of business rates has become highly controversial with specialists arguing ‘to base tax on the property value rather than business turnover or profit is unfair’. This means that smaller businesses in affluent areas can expect to be paying higher rates before getting into their stride. To counter this, there is some small business rates relief.
Business rates for smaller businesses are slightly different as, in some cases, the government offers relief or small business rate exemptions. So, how do you know if you qualify as a small business? If your business utilises just one property and this has a rateable value of below £15,000 you may qualify. In the instance that your business property has a rateable value of below £12,000 you won’t have to pay business rates at all. If your valuation falls between £12,001 and £15,000 the relief will sit between 0 and 100% accordingly. If you are receiving relief, to estimate your business rate, once you have multiplied your ‘multiplier’ by the ‘rateable value’, just deduct your relief and you will find your business rate. You can read more about alternative reliefs available such as rural and charity rate relief.
If your business is based at home you may have to pay business rates too, but this depends on a number of factors. You will have to pay business rates alongside council tax if: The property has employees You sell things at the property to visitors The property is divided into both domestic and business sections. Business rates come in all sizes just like your business – to be sure, it’s always best to check direct with The Valuation Office Agency.