Business Rates in the UK – Complete Guide

Business Rates in the UK Complete Guide

Business rates are the local tax you have to pay to the local council if you run your business from a commercial property or your home. If you are somebody who has a business like this, you must know everything about the business rates in the UK so that we can work with ease.

The business rate is majorly given by shops, offices, pubs, factories in the local areas. It is majorly every non-domestic property that has to pay the business way as prescribed by the government in the UK.

Domestic Property & Non-Domestic Property

Domestic Property & Non Domestic Property

Many people ask if they are not using the property development for the business, are we supposed to pay the business rate? The answer is yes even if you are not using the property to run your small business and it is not classified as a domestic property, you will have to pay the business rate.

The local authorities charge the business rates and bills, and they are responsible for the same. The rate of a particular business premise is prescribed by a valuation office agency that acts under HMRC.

What Are Business Rates Paid By The People Used For?

What Are Business Rates Paid By The People Used For

The business rates collected by the local authorities directly go into the hands of the central government. However, a certain proportion is given to the local authorities, which is further used for the betterment of the society itself. The business rates collected by the local authorities are used to enhance the quality of public transport, street lighting, public spaces, emergency services, and more. So whatever you pay in return is used for your better livelihood only.

Guide to Calculate Business Rates

Guide to calculate business rates

Before starting with the calculation of the business rate, you must be aware of the rateable value of your property. Its market value determines the rateable value of the property as of 1st April 2015. The valuation office agency prescribes this date.

When you know the relatable value of your property, you can multiply it by using a multiplier as determined by VOA. With the multiplier, you will find the exact amount that you will have to pay before getting any relief.

This all might be very confusing so let’s take an example. Suppose you have a business property with a rateable value of 10,000. To know the property’s business rate, you will have to multiply 10,000 by the multiplier, which is 0.491p.

The calculation gives you the business rate of £4910. In most of the rateable values below 15000, people are most likely to get the relief, but then it depends on various factors that he will read ahead.

Work From Home and Business Rates

Work From Home and Business Rates

A lot of people get confused with the work from home and business rate association. In a work-from-home situation, the business rate applies in certain circumstances that we have mentioned below.

But if you have occupied a small part of your home for work purposes, you won’t be required to pay the business rate. Circumstances:

  • Your property is divided into domestic and business parts, such as acquiring a flat above a shop.
  • Employing people at your property.
  • Selling services or goods to the
  • People who visit your property.

These are the three significant circumstances in which you will be liable to pay the business rates. For more inquiries and to clear your doubts, you can contact the valuation office agency or any local council around you.

What Businesses Exempt From the Business Rates?

What Businesses Exempt From the Business Rates

Certain businesses aren’t required to pay the business rates. Such as:

  • Religious buildings
  • Buildings that are occupied or used by or for disabled people.
  • Farmland and buildings. However, if it is an office, the business rates will be applicable.

Business rates can reduce due to a variety of reasons, and it also depends on the location. Specific relief that you can get on the business rates are:

  • Small business rate relief
  • Rural rate relief
  • Charitable rate relief
  • Hardship relief
  • Enterprise zones
  • Transitional relief
  • Empty buildings relief

Business Evaluation & Revaluation

You can apply for any business rate relief, and then the local authorities will conduct a business evaluation to see if you are eligible for the particular relief. Earlier, the evaluation process used to happen every five years, but later in 2018, it was changed to 3 years.

In the evaluation process, the property is assigned a rateable value and the multipliers. In the revaluation process, old properties are also assigned with a new rateable value and multiplier.

To know the exact value of your property and if it is correct, you can get in contact with the Valuation Office Agency to see and ask for the documents related to your property to know the details about the revaluation process.

How To Pay The Business Rates?

How To Pay The Business Rates

The payment of the business rates entirely depends on your local council as they are responsible for charging and billing you for the business rate. Every year in February or March, they will send an annual bill of your business rate that mentions the mode of payment.

If you have any questions about the payment mode or your business rate, you can contact your local council when they issue you the bill. It would be best to remember that business states are an allowable expense; you can add the payment details on your annual tax return.

Summing it Up

Business Rates are an essential part of the UK’s functioning. Even though many people find it unnecessary, it is necessary as it helps maintain its standard of living. If you want, you can apply for the various rate relief categories mentioned above after looking at the eligibility criteria. For more details, you can contact the Valuation Office Agency of the local council that issues you the business rate bill.