Working from home, a lifestyle previously occupied predominantly by freelancers has become the norm for many people following the first pandemic wave. Many have adapted to the change, and have chosen to keep their home setup in favour of returning to the office. In some cases businesses have taken their entire operation digital, employing a remote workforce and doing away with physical headquarters.
While this presents a whole new topic around the introduction of an online sales tax, it also leaves many businesses somewhere in between. More staff are operating hybrid roles and the office space has changed. This might have made the office less integral, altering it's value to the business.
The home-setup might have also changed. What started as the dining table and some old book to raise your laptop, might have evolved to a sophisticated home office at the bottom of the garden.
Whatever your situation is with home-working, you may be asking yourself questions on your business rates liability. It might even be that you had received a business rates bill in spring that reflected your new set-up. It's worth understanding exactly what your new business rates liabilities are and if there are any opportunities to mitigate your business rates bill going forward.
Now I work remotely, do I still need to pay business rates?
This depends on your current setup, in most cases you're not going to be issued a business rates bill for an up-scaled airing cupboard with a desk in it.
For now at least, you're also safe from additional tax if you sell your product by post, or use a drop-shipping warehouse to store your stock. Although this may change in the future with a potential online sales tax on the horizon.
In these scenarios, your council tax will keep your operation paying its share. However, you may also be for business rates if your working from home setup has taken the form of a more traditional business.
If you're selling things to walk-in customers at your premises, have members of staff working under your roof, or have separated your property for domestic and commercial purposes you may need to be paying business rates.
It all falls under the remit of the Valuation office, who will ultimately decide based on four key factors:
- How your business works
-Whether or not you have on-site trade
-If you have staff working from your premises
-If you've made specific, significant changes to your home, in order to facilitate the operation of your business.
Importantly, this is all considered in the same way as any business rates appeal process is. Making the professional presentation of your evidence paramount to ensuring the decision goes in your favour.
What if I am liable for business rates on a different, operational site.
So you've incorporated a large portion of your home space into your business, but you still use an external property for other operations. Maybe the flexibility suits your business or maybe this is an interim position while making a transition to working from home (or vice versa).
In this situation, you may find yourself liable for two separate business rates bills. If you receive small business rates relief, you could even find that you're no longer eligible. Why is this?
Small business rates relief is on a sliding scale, with a small discount starting when a property's rateable value is at £15,000 and a 100% discount is given if a property's rateable value is less than £12,000.
In most cases, businesses with two properties aren't eligible to claim SBRR; all liable properties must have a rateable value of less than £2,899 AND the total rateable value of all of your properties must have a combined rateable value of less than £20,000.
This could leave small businesses in a very tricky position, suddenly paying business rates on two properties when they had previously not had to pay any at all.
We'd recommend consulting with a professional here, as slight changes in your setup could potentially save you thousands of pounds in business rates.
For many businesses, a transition to a more remote setup is a completely new venture, and something done out of necessity to adapt to current times. Change is also expensive, with big costs involved in infrastructure, both physical and digital! Amongst these expenditures, the last thing your business needs is a bill you're not prepared for. Especially if your property situation has been wrongly assessed.
If you have more questions about your business rates bill, or think you might be overpaying. Get in touch for a free, no strings attached consultation.