Millions of UK companies face significant business rate increases from April 1st after the government recently re-evaluated the rateable value of the UK’s 1.8 million eligible commercial premises including offices. It is the first re-evaluation since 2010.
The increases, which will take effect immediately and be reflected in higher monthly instalments, have been described as the largest changes “in a generation”.
This is largely because since the last re-evaluation seven years ago many yearly rents – and therefore rateable values – have risen sharply.
Rateable values are based on average rents for similar offices and businesses in an area. And although on the face of it bills will rise significantly, there are several variables involved.
Geography is one of them. Businesses based in London and South of England where office rents have been rising fastest since 2010, will see the biggest business rate rises. Those in the North and Midlands may see small ones, and even reductions. So how is it going to work?
Rateable values are increasing
The government has not released any average regional or nationwide data on how much rateable values are going to increase, but recently-reported cases suggest than many premises particularly in London and the South are facing rises of approximately 50%. Some areas of central London, where office rents have rocketed in recent years, are said to be facing increases of between 100% and 400%.
You can appeal
If a business believes its premises’ rateable value is not accurate or fair, it can appeal to the government’s Valuations Office Agency to have it reassessed.
The multiplier has been lowered
The multiplier is the number of pence in the £1 a business pays in relation to it premises’ rateable value. This is dropping from 49.3p last year to 47.9p this year. This will offset some of the rateable value rises. Business premises with smaller rateable values (see below) pay a multiplier of 46.6p.
In his budget statement in March the Chancellor revealed that smaller businesses with premises that have rateable values less than £12,000 will pay no business rates at all after the Small Business Rate Relief (SBRR) was doubled from 50% to 100%. Those with rateable values of between £12,000 and £15,000 will be given tapered relief. If your rateable value is £13,500, you’ll get 50% of your bill. If it’s £14,000, you’ll get 33% off. Also, only premises that have rateable values over £51,000 will pay the full multiplier.
Business rate relief
If an office has a rateable value of £15,000 or less, it may be eligible for additional business rate relief, which will be paid out of a £300m national fund. A business must apply to their local authority to find out.
If you would like help in minimising your liability to increased Business Rate taxation, contact email@example.com.
Please note: this guide is for the business rate in England only. The tax is applied differently in other parts of the UK.