What to do when you can't afford to pay your business rates

I can't pay my business rates - what are my options?

Business rates are essentially a tax imposed on properties which are used for commercial as opposed to residential purposes. They can be seen as the business version of council tax. Business rates are enforced on a variety of units including retail units, warehouses, offices, bars and restaurants.

Struggling to pay business rates? If you cannot pay your business rates, you need to speak to a member of the expert team at Real Business Rescue to understand your next steps - Call Today on 0808 253 5217

How much will I have to pay in business rates?

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 larger business rates valuation.

The rateable value is then used to form part of a calculation which will work out the exact level of your yearly business rates liability.

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Can I contest my business rates bill if I think it is too high?

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.

I’m struggling to pay my business rates – is there any help available?

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 if that is the only property your business uses. Tapered relief is then given to properties with a rateable value between £12,000 and £15,000.

There are various other more niche rates relief schemes which are designed to help specific sectors. These include the rural rate relief, retail, hospitality and leisure relief, as well as the charitable rate relief which applies to charities and amateur sports clubs. 

As business rates, and the associated relief schemes, are managed by your local council, this is who you will have to get in contact with if you believe you may be eligible for relief on your business rates.

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What happens if I do not pay my business rates?

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:

What options are there if I cannot afford to pay my business rates?

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 as this could indicate your company is insolvent. An insolvency practitioner will be able to discuss the range of options open to you and your business including:

Across a nationwide network of offices, Real Business Rescue provides company directors the help and guidance they need when dealing with a distressed business. With over 100 licensed insolvency practitioners we are perfectly placed to help whether you are struggling paying your business rates, HMRC, or any other creditor. Contact us today to arrange a no-obligation consultation.