There are numerous costs associated with running a business. Taxes inevitably make up a significant proportion of this expenditure.
In this article we will look at business rates – what they are, how much they cost, and small business rates relief.
What do business rates apply to?
Business rates are for nearly all non-domestic properties, including:
- Factories, and
- Holiday rental homes and guest houses.
How are they calculated?
Business rates are based on the commercial value of your business premises. That value is decided (in England) by the Valuation Office Agency (VOA).
To find out the valuation the VOA has given your premises, you can search online at the government website here for its rateable value. Once you know the rateable value, you then need to multiply it by either the standard or small business multiplier.
If your business property is valued at over £51,000 then you use the standard multiplier, which is 49.3p. If your business property is valued at under £51,000 then you can use the small business multiplier, which is 48p.
For example, if your business property is valued at £35,000 then you take that amount and multiply it by the small business multiplier – £35,000 × 0.48 = £16,800. This is the amount that you will need to pay in business rates each year.
What if I think my rates are wrong?
Because the rates are based around how much your property is valued, you may be paying more than you should if the valuation record is incorrect.
After you have discovered your property’s valuation, search for similar properties nearby. If you find any major differences in price and especially if those differences mean that your company’s business premises valuation would fall into the small business multiplier threshold, you can appeal the valuation of your property.
To make an appeal, find your business property and then follow the online appeal link to start the process.
What is the small business rates relief?
Business rates are an expensive and controversial tax. You only need to remember the media outcry there was last year when the rates of all business premises were revalued and the multiplier was increased.
For many small businesses, the business rates bill is bigger than the corporation tax bill. There is a relief available to small businesses which occupy commercial properties with a rateable value of £15,000 or less and if your business only occupies the one property.
Full relief (which means that there are no business rates at all) is available to businesses which have a rateable value of £12,000 or less.
If your business property is valued between £12,000 and £15,000 then the amount of relief that you are owed is based on a percentage, with £12,000 being 100% and £15,000 being 0%.
For example, if your business property is valued at £13,500 then you will receive a 50% tax relief, and if your property is valued at £14,000 then you’ll qualify for 33% off your bill.
Small business rates relief will be automatically applied by your local council.
We can help
There are other relief schemes available for business rates but don’t get too excited – they are limited in scope. That said, it’s better than any money remains in your business bank account than if it’s needlessly transferred to your local council’s business account.
To find out more about business rates, speak to us on 01202 577 500 or email us at firstname.lastname@example.org.