To many, the business rates tax is another certainty, factored into profit margins as a given. But as the bill gets bigger each year, more and more people are starting to question how their bill is calculated.
Understanding some business rates foundations are key when it comes to pursuing a business rates reduction, and getting business rates relief where eligible.
There has also never been a better time to learn more about your business rates; with less than a year of the current rating period left, any overpayments will be lost unless a successful appeal is lodged before March 2023.
If you're looking for a one-stop beginners course on your business rates, you've come to the right place. CPA has decades of experience within our team, specialising in business rates mitigation and reduction. Our RICS regulated, chartered surveyors know the review process inside and out, so we know exactly what it takes to produce a successful appeal.
But before we look at what makes a good business rates appeal, we need to understand your rateable value, and how your business rates bill is worked out.
Your rateable value.
All commercial or non-domestic properties are assigned a rateable value. It's used to loosely determine how valuable the property is
For the past ten years, a commercial property's rateable value has been re-evaluated every five years, marking the end of a rating cycle and the beginning of a new one. At the start of the 2023 rating period, this cycle will be shortened to three years.
However, this does not mean that you have to wait for a full rating cycle to get your property's rateable value assessed! You're able to challenge your rateable value at any point during the cycle.
While your local council issues your business rates bill, it's a sector within HM revenue and customs that actually set your rateable value. This is the Valuation Office Agency, and it's the VOA you need to appeal against if you believe you're overpaying.
The process the VOA use for determining your rateable value is based on the open market rent in the area during the previous rating period. The VOA endeavours to gather as much evidence as they can on open-market rent before setting a rateable value, but this method will only ever yield an estimate. It's because of this, we always recommend challenging your rateable value.
The business rates multiplier.
You'll notice that your rateable value isn't actually what you pay in business rates. And this is due to the business rates multiplier.
So in order to work out your rates payable, your rateable value is taken and multiplied by the applicable multiplier. For any premises with a rateable value of £51,000 or over, the multiplier is 51.2p. This means you'll always pay just under half of what you're rateable value is, before any relief schemes are taken into consideration.
For properties under £51,000, the multiplier is 49.9p giving a slight discount to less valuable properties.
Each year, the multiplier will usually go up with inflation. However, given the current economical climate, the chancellor has announced that this year's multiplier will be frozen until further notice.
What can I do if I've overpaid?
Now we know a little more about how business rates bills are calculated, we can start to work on getting them reduced.
As we mentioned earlier, your rateable value is based on a historic estimate, and a lot can change to a property since its rateable value was decided! There are a few main points you might want to consider when deciding if you want to challenge your business rates:
Has the property undergone structural changes since the start of this rating period, 2017?
Has the use of the property changed since the start of this rating period?
Is there anything listed in the VOA property evaluation that isn't present at the premises?
Does the floor plan correctly reflect the division of space found on the VOA property evaluation?
If you're unsure whether there are grounds for an appeal on your property, it's worth getting in touch with a professional agent such as ourselves for further, free and no-obligation advice. There is always the risk of your rateable value going up through the process which is where an agent can help by risk assessing your case to ensure a positive outcome before it's sent off to the VOA.
If you have further questions regarding your rates, get in touch!
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