If you are currently occupying a commercial property in some shape or form, there’s a high probability that you may be liable to pay business rates. Whenever a property or part of a property is used for non-domestic purposes, business rates are charged. This means that all kinds of premises like offices, pubs, retail stores, warehouses and yards will be eligible for business rates, which is essentially a form of property tax.
At the time of writing, business rates in England are calculated based on a building’s ‘rateable value’. In simple terms, this is the property’s likely value if it was put on the open market to sell today. Historically, business rate revaluations have taken place periodically every five years. Revaluations are undertaken by the Valuation Office Agency (VOA), who can amend the rateable value of a commercial premises based on the state of the commercial property market.
The latest business rate revaluation took place in 2017, with the next one scheduled to take place in 2021 as part of plans to ensure rateable values are as fair as possible, avoiding some businesses having to pay more than they need to.
GOV.UK gives business owners a chance to estimate their annual business rates using their online calculator, which multiplies the rateable value of their premises by the correct multiplier set by central government. Appeals can be made by business owners that believe their property’s rateable value is incorrect.
There are some commercial properties that are ineligible for business rates, including farm buildings and premises used for the welfare of the disabled community. There are also a number of business rate relief schemes active that many small businesses and organisations can avail themselves of, including:
- Small business rate relief
Available to business whose property has a rateable value of less than £15,000. Those with a rateable value of less than £12,000 will be wholly exempt from business rates.
- Rural rate relief
Available to businesses in rural areas with a population of less than 3,000. Contact your local council to determine your eligibility.
- Charitable rate relief
Charitable organisations and community amateur sports clubs can receive up to 80% business rate relief, providing the premises is used solely for charitable purposes.
If you currently work from home and are worried that you might be eligible for business rates, don’t panic. You are only eligible for business rates when working from home if it is a mixed-use property i.e. part-domestic, part-commercial. Alternatively, if you employ other people to work at your property, or you sell goods or services to people at your home, you could be eligible for business rates.
If you are thinking of moving into a new workspace for your business, Pall Mall Estates can help. With a nationwide portfolio of commercial space, totalling 5.5 million square feet of floor area, we have a growing selection of office, light industrial, retail and studio space to let on flexible lease terms.
If you do decide to move into a new commercial property that’s owned and managed by Pall Mall Estates, you’ll need to report your change of premises to the VOA as soon as possible. This will ensure you pay the correct amount of business rates, based on the rateable value of your new home. If you forget to do this, you could be stung with a backdated business rates bill that all businesses could do without.