Updated: 5th January 2021
Business rates are essentially a tax imposed on properties which are used for commercial as opposed to residential purposes. Business rates are enforced on a variety of units including retail units, warehouses, offices, bars and restaurants.
There is not a set amount which is payable by every business; instead each property is individually assessed and given a ‘rateable value’ – it is this value which determines the amount charged. A property’s rateable value is based on its estimated open market rental value; therefore the higher the property’s value, the higher associated business rates will be. This is why properties in more desirable locations, such as retail units situated on prominent high streets, typically attract a large business rates valuation.
Please note that your rateable value is not the amount you will be required to pay. The rateable value is used to form part of a calculation which will work out the exact level of your business rates liability.
If you have reason to believe you are being charged an inflated amount for your business rates, there is a process in place which will allow you to challenge this. However, you must have a valid reason for believing you are being charged too much; simply not being able to afford to pay is not enough.
Start by checking other similar properties in your area; this can be done here. This tool can also be used if you would like to contest your assessment value. Remember that just because the property next door to you may have a lower rateable value, this does not necessarily mean that you have been assessed incorrectly. There could be a number of reasons behind the difference, for instance it could be that that property is significantly smaller, or lacks the parking spaces your property has. However, if you know the properties to be identical, then you may able to successfully challenge for a reduction.
There are a number of business rate relief schemes which could help cut the amount you have to pay should you qualify for them.
Firstly there is the small business rates relief programme. This exempts any property with a rateable value of less than £12,000 from business rates entirely. Tapered relief is then given to properties with a rateable value between £12,000 and £15,000.
Further measure were introduced as part of the 2018 Budget when the Chancellor announced that businesses with a rateable value of less than £51,000 would see their business rates bill slashed by a third for the next two years, which represents over an £8,000 saving for some. Businesses who already qualify for tapered relief through the small business rates scheme will be able to take advantage of this additional relief programme as well. This initiative is estimated to apply to 90% of all shops, restaurants, cafes, and bars, providing a much-needed financial boost to this distressed sector.
There are various other more niche rates relief schemes which are designed to help specific sectors. These include the rural rate relief as well as the charitable rate relief which applies to charities and amateur sports clubs.
Business rates are administered by local councils, and they have the power to implement a variety of measures on companies which fail to pay on time. This typically follows the following process:
If you are having problems paying your business rates, your first port of call should be getting in contact with your council. If you notify them of your inability to pay before you miss a payment, you stand a much better chance of being able to negotiate some form of plan with them going forwards. This may involve delaying a payment or clearing the amount you owe through a series of more manageable instalments.
If your financial problems are such that they are likely to cause you issues paying your business rates in future months, you need to seek expert help and advice from an insolvency practitioner. An insolvency practitioner will be able to discuss the range of options open to you and your business including:
Across a nationwide network of Over 100 UK Offices, Real Business Rescue provides company directors the help and guidance they need when dealing with a distressed business. With over 70 licensed insolvency practitioners we are perfectly placed to help whether you are struggling paying your business rates, HMRC, or any other creditor. Call us today on 0800 644 6080 to arrange a no-obligation consultation.
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