Breaking Down Business Rates

‘Business rates’, British taxes dating back to the 17th century, are a notable expense for small business owners operating from commercial properties. Understanding the intricacies of these rates is vital for business owners, but they can sometimes lead to confusion.

What are Business Rates?

Business rates are a long-standing tax on companies in non-domestic properties set by the Valuation Office Agency (VOA), an arm of HMRC. The rates are calculated based on the property's rateable value (RV), which reflects its potential annual rent.

The current multiplier is around 50p to the pound, but big businesses with an RV exceeding £51,000 will receive a higher multiplier. The VOA introduced the Check, Challenge, Appeal (CCA) scheme in 2017, requiring businesses to verify, challenge and appeal their assessments.

Who Pays Business Rates?

The responsibility to pay business rates falls on the occupier, but in some cases, the landlord will include business rates in the rent. If the responsible party fails to pay, the landlord can take action against the occupier.

It’s important to note that empty properties still incur rates, with the responsibility falling on the landlord after three months of vacancy. For this reason, some have championed pop-up initiatives as a solution. Certain exemptions to this rule do exist, such as extended relief for industrial premises, listed buildings and properties owned by registered charities.

How Much are Business Rates?

The RV is not the actual amount paid, but local councils use it to calculate a rates bill. Depending on circumstances, SMEs may be eligible for rate relief, either permanent or temporary.

For example, during the Covid-19 pandemic, retail, leisure and hospitality businesses were granted a significant 75% relief up to £110,000, extending into the 2024/25 tax year.

How do I Register for Business Rates?

Contact a reputable rating surveyor or check the VOA website to register for business rates. If your business operates from a new site, a surveyor can inform the local council for assessment. Given the technical nature of business rates and the legal nuances involved, seeking advice from qualified professionals is always advised.

Business Rates: The Key Takeaways

Navigating business rates is an important task in the management of a small business. Understanding the valuation process, knowing who bears the responsibility, exploring relief schemes and seeking professional guidance are all essential steps.

For advice on your unique circumstances and expert assistance, reaching out to qualified representatives can help streamline the process and ensure compliance.

Securing a Business Loan

At BusinessComparison, we’re here to help you find the most suitable loans for your business. Our comprehensive comparison includes a range of business loans from reputable high-street banks to more specialised, small lenders.

Opening a Business Bank Account

A wide array of business account providers offer a range of accounts that feature overdrafts, online account management, and app integration to balance text alerts. Having a business-specific account gives you a clear separation between personal and business finances.

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Sam White