Business rates are set to change from 1 April 2017.
The effects of the business rates rise will vary throughout England and Wales. London will face an average increase of 9% although some London Boroughs such as Hackney, and the City of London will face average increases in business rates of around 32% with some properties allegedly face increases as high as 177%. Conversely, other parts of the country such as in the North of England will see an overall fall in business rates.
Many businesses are understandably concerned about the impact of this business rates revaluation. Here are some practical steps to help you prepare for this change:
- Check the rateable value of your property by contacting the Valuation Office Agency (VOA) at HMRC. If you think the rateable value of your business property is too high, you can ask a qualified rating surveyor to assess the rateable value of your business property. You can find details of chartered surveyors from the Royal Institute of Chartered Surveyors (RICS) or ask your contact at Edwin Coe LLP to recommend a chartered surveyor to you.
- Check whether you are exempt from paying business rates. The Government has doubled the level of relief for small businesses meaning that businesses that operate out of only one property with a rateable value of less than £12,000 are exempt from paying business rates, and properties with a rateable value of between £12,000 and £15,000 will have their business rates tapered. The likelihood, however, is that your business property’s rateable value will be above £15,000 and you will have to pay the full amount.
- Check if any discounts have been applied. The Government has enacted transitional measures to stop businesses being hit with large increases in business rates. In 2017/18, properties with a rateable value of up to £20,000 (£28,000 in London) (small properties) will see a maximum increase of 5%. Properties with a rateable value of between £20,000 and £100,000 (medium properties) will see a maximum increase of 12.5%, and properties with a rateable value of more than £100,000 (large properties) will see their rates rise by no more than 42%.
Conversely, if you are fortunate enough to benefit from a decrease in business rates, decreases in business rates will also be gradually phased in over 5 years; the Government will apply a maximum discount to your business rates. In the first year, the maximum discount is 20% for small properties, 10% for medium properties and only 4.1% for large properties.
You may also be eligible for other reliefs if, for instance, your property is located in an enterprise zone.
Councils should apply any business rate reliefs and discounts to your tax bill; always, double-check your business rates liability to ensure that all applicable business rates have been applied.
- Appeal. If you believe that your business rates have been not calculated accurately, you have the option to appeal against your business rates liability. You can submit an appeal to the VOA by post or online. The Government, however, may block an appeal if the VOA can demonstrate that its calculations are within the bounds of ‘reasonable professional judgment’ which severely curtails the right to appeal and means that you may be paying as much as 15% more than you should.
- Pay. In practical terms, if you are a tenant, you must ensure that you have enough money to pay the increased business rates. If you are a landlord, be aware that your tenants may have cash flow difficulties in making payments and that you may need to adjust your rent to an amount that tenants can afford after the business rates revaluations are considered.
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