Business Rates – How are they calculated?

The rateable value is the open market rental value on 1 April 2015, which is based on an estimate by the Valuation Office Agency (VOA).

Business rates are calculated differently for those in Scotland or Northern Ireland.

Business Rates – Revaluation

This will usually take place every 5 years. The most recent revaluation took place on 1st April 2017, and was based on rateable values from 1st April 2015. Business rates are handled differently in Scotland and Northern Ireland.

The following happens each time revaluation takes place:

• Commercial properties are given a new rateable value
• Multipliers used for calculations are revised

You can ensure rateable valuations for your property are correct by providing the Valuation Office Agency (VOA) updated rental costs for your property each time revaluation takes place.

Paying Business Rates

You will be given the option to pay your business rates over 10 monthly instalments. The occupier of the property is liable to pay business rates. If you’re a tenant, make sure to check with the landlord to see if business rates have been included as part of your rental agreement.

Empty and partly occupied properties

If the commercial property is only partly occupied, the local authority will make a decision on whether to apply a business rate relief.

What is Business Rate Relief?

If you meet the eligible criteria, you can apply for business rates relief. If the commercial property is occupied by a charity, you are entitled to 80% mandatory business rate relief. If you’re a non-profit organisation, you may be eligible for up to 100% discretionary business rate relief. You will need to apply for this through your local authority, they will decide on this.

Other exemptions

Some types of properties are exempt from paying business rates. These include the following:

• Farm buildings
• Buildings used for disabled people
• Buildings used for welfare

What is small business rate relief

If your business occupies a ‘small’ property, you may be eligible for small business rates relief.

Small business rate relief was introduced in 2010, the scheme provides a reduction on your business rates if you meet the eligible criteria.

With the 2017 revaluation taking place, for properties that now no longer meet the qualifying criteria for business rates relief, there are new caps on the amount you can expect to pay for a certain period. If applicable, until 31 March 2018, your rates will not increase by more than £50 per month.

What is rural rate relief?

• The only post office or village shop has a rateable value of up to £8,500
• The only petrol station or public house has a rateable value of up to £12,500

Contact your local authority to see if you meet the qualifying criteria before applying for rural rate relief.

What is charitable rate relief?

You can check if you’re eligible by contacting your local authority, they may even be able to provide you with a discount of up to 100%, this is known as ‘discretionary relief’.

However, if you find out you’re not eligible for charitable rate relief, there’s a chance that you may still be eligible for discretionary relief if you’re a not for profit or voluntary organisation.

Enterprise zones

If you plan to start a new business or you’re relocating to an enterprise zone, you may be eligible for business rates relief.

What is exempted buildings and empty buildings relief?

Exempted buildings relief

There are some properties that are exempt from business rates altogether. These include the following:

• Agricultural land and buildings, these include fish farms
• Buildings that are used for training or the welfare of disabled people
• Buildings that are registered for public religious worship e.g. churches and mosques

Empty property relief

Here are some examples of properties that could receive ‘extended empty property relief’:

• Industrial premises – warehouses are exempt for an additional 3 months
• Listed buildings – until they are occupied again
• Buildings that have a rateable value below £2,900 – until they’re reoccupied
• Properties owned by charities – only if the property’s next use will mostly be for charitable purposes
• Community amateur sports club buildings – only if the next use will mostly be as a sports club

If your property is due to become vacant or is already vacant, contact your local authority to make them aware as soon as possible.

What is hardship relief

To qualify, you must satisfy your local authority through the following:

• You would be placed in financial hardship without this relief
• Providing hardship relief to you is in the interest of local people

If you meet the above, contact your local authority to explain the circumstances and you may be able to receive hardship relief.

What is transition relief?

What about relief for pubs?

If you’re a pub in England and your rateable value is below £100,000, you’ll receive a £1,000 reduction on your business rates bill. This relief is available for the following tax years: 2017 to 2018 and 2018 to 2019.

What happens if my business or premises change?

Here are a few examples where your business rates could change:

• You move property or make changes to your current property
• The nature of the business you’re in changes
• You have decided to sublet part of the commercial property
• You have decided to merge two or more properties into one single property

My business premises has been affected by local disruption

Here are a few examples of disruption to businesses:

• Building works
• Road works
• Fire
• Flooding
• Storm

Do I still pay Business Rates if I work from home?

• You’re using a small part of your home for business e.g. use of a room as your office
• You sell items by post e.g. online store

However, you may have to pay for business rates in addition to council tax for the following reasons:

• The property in question is part business and part domestic e.g. you reside above a shop
• Goods and/or services that you sell are provided to people who visit your property
• You employ other people who will work at your property
• You’ve made modifications to your property for business purposes e.g. your garage or any other outer buildings have been converted to a repair shop or beauty salon

Business rates for public houses and licensed trade

This rateable value is referred to as ‘fair maintainable trade’, and is based on the following factors:

• What type of pub or licensed premises it is
• The pub or licensed trade’s location
• What services does the pub or license trade offer e.g. food and drink, gaming activities, or screening of sporting events such as football or rugby

If you want to check what figures are currently being used, or you’re in disagreement, you must contact the VOA for clarification. It will be useful to have some details beforehand, ensure you have details of business turnover (excluding VAT) for all sources of income, this includes food, liquor, and gaming.

Business rates for self-catering and holiday let accommodation

The Valuation Office Agency (VOA) will calculate business rates based on a number of different factors, these include the following:

• What type of property it is
• The size of the property
• Where the property is located
• Number of people that reside and sleep at the property

Note: the term ‘single bed space’ is used to identify how many people are able to sleep at the property.

What if my business rates have been calculated incorrectly?

In some instances, it’s possible for your business rates to have been calculated incorrectly. The amount you’re paying right now or the amount you are required to pay may need to be adjusted.

If you believe that your business rates have been calculated incorrectly, check the VOA’s rateable value for the property. It’s also a good idea to compare it with other properties in your area that are similar. After checking this, if you’re still not satisfied, you should then apply to have them recalculated.

How do I contact the Valuation Office Agency?

You can contact the Valuation Office Agency (VOA) through a number of different methods.

If you wish to write to the VOA, you can send them a letter at the following address:

Need to speak to someone over the phone at the VOA? Here are the contact numbers:

The office opening hours are as follows:

Monday to Friday – 8:30am to 5:00pm
Closed on bank holidays

Follow the Valuation Office Agency on Twitter at: https://twitter.com/VOAgovuk

Business Rates Calculator

Depending on your property’s rateable value, you will then need to multiply this with the correct Uniform Business Rate (UBR). Once you have done this, subtract any business rate relief that you’re entitled to. This should give you a rough estimation.

We hope you found our ultimate guide to business rates helpful. For more business advice and guides, check out our blog.

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