What are business rates?
All non-domestic properties are assessed for business rates – the assessment reflects the extent of occupation, the nature of the property (e.g. library), the rateable value (see below) and the date that the assessment is created or amended (known as the ‘effective date’).
Each individual property is known in the rating world as a ‘hereditament’ and the assessments are contained in rating lists.
It is the responsibility of the Valuation Office Agency (VOA) - an executive agency of HM Revenues and Customs - to both compile and maintain the ratings lists.
Business rate liability i.e. the amount you are required to pay, is calculated and collected by the local council.
What is the 2017 business rates revaluation?
This is the first revaluation of business rates in England, Wales and Scotland since 1st April 2010 and it comes into force on 1st April 2017.
On 30 September 2016, the VOA published the draft rating list for the 2017 revaluation.
How can I find and check my business rates valuation?
To check your draft assessment, simply search for your property on the VOA website:
How is the rateable value (RV) worked out?
The rateable value (RV) is an estimate of the rental value of an individual property or hereditament at a set valuation date. For the 2017 rating list, the set valuation date is 1st April 2015.
Depending on the type of property, three main valuation methods can be used to determine a property’s RV:
- direct rental (i.e. based on rents paid)
- cost based (used in instances where direct methods are unsuitable to asses capital costs, e.g. plant and machinery)
- profits based (i.e. receipts and expenditures)
What is the uniform business rate (UBR)?
The rates payable for each assessment are calculated by multiplying the RV by the uniform business rate (UBR).
In the 2016 Autumn Statement the chancellor announced, that the UBR for the 2017/18 rate year will be 46.6p for RVs below £51,000 and 47.9p for RVs of £51,000 and above.
However, this simplistic calculation is complicated by the application of transitional relief (see below). There is also a system of reliefs that include small business rate relief, rural rate relief, charitable rate relief, enterprise zone relief and retail relief.
Do I qualify for small business rates relief?
From 1st April 2017 occupiers of a single business premises with a RV of £12,000 or less will receive 100% relief, with relief on a sliding scale from 100% to 0% for RVs between £12,001 and £15,000.
If the occupier has a main property with RV less than £12,000 and has additional properties with individual RVs less than £2,600, the relief will only be applied to the main property. If the aggregate total of all RVs is more than £17,999, small business rates relief (SBRR) will not apply, even to the main property.
If in occupation of more than one property, and the RV of both properties is more than £2,599, SBRR will not apply to either property.
When will the new rate demands be issued?
Councils will start issuing demands from mid February 2017 onwards, ready for payments to be made from 1st April 2017.
What is transitional relief?
This exists to ‘phase in’ large increases or decreases in rate liability following a revaluation.
The cap on how much a rate liability can increase or decrease post the start of the 2017 revaluation depends on the rateable value of the property.
What is empty rate relief?
Three months rate relief for all properties can be sought if they are unoccupied.
Industrial properties benefit from six months empty rate relief.
What’s new in the 2017 business rates revaluation?
There is a significant change to the process of challenging rateable values. The new system is called ‘Check, Challenge and Appeal’. We strongly recommend that ratepayers seek professional advice to understand further the implications of the changes.
A company has contacted me and promised to save me money – can I believe them?
In short, no! No rating surveyor should be able to guarantee any form of savings. Practices should be RICS regulated and adhere to the Rating Consultancy Code of Practice in delivering rating advice.
Is there a charge for challenging your rating assessment?
There is a misconception that there is a fee to be paid to the VOA for challenging your rateable value. Currently there are no fees payable either to lodge a proposal with the Valuation Office or, if the matter cannot be resolved, proceeding to Valuation Tribunal. As part of the ‘check, challenge and appeal’ process for the 2017 revaluation, fees will be charged for proceeding to Valuation Tribunal. The ‘check’ and ‘challenge’ stage remain free.
In what ways can I reduce my business rate liabilities?
There are many ways to reduce liability whether it be via a standard appeals because either the square meter areas are wrong or the RV is greater than your current rent; implementing empty rate strategies, lodging appeals due to physical changes in the locality (known as material change of circumstance appeals), splitting, merging, deleting assessments, and delaying new rating assessments becoming liable for business rates.
The JLL Rating team is a dedicated national team of experts and have saved over £2 billion for clients since 2005.
Our team are able to provide a bespoke strategy using all available mechanisms to reduce liability – it is not just about appeals.
Should I always challenge my assessment?
No! The VOA can increase an assessment if they believe it is too low and fine you for supplying false information knowingly, recklessly or carelessly. For example if your property has been altered and the VOA is not yet aware of the changes, or if your rent is greater than the RV, you should carefully consider the merits of entering the ‘check, challenge and appeal’ process.
Are there any deadlines for lodging appeals for the 2017 revaluation after 1st April 2017?
No. As the legislation is currently drafted a challenge can be initiated at any stage of the life of the 2017 revaluation. With the introduction of ‘Check, Challenge and Appeal’, it has never been more important to have a clear strategy regarding the timing challenges should be initiated.