Does my small business need to pay business rates?
Business Rates are taxes and one of the many running costs you need to consider – whether you’re a freelancer or a limited company. There are around 1.8 million eligible commercial properties in the UK. Similar to Council Tax, business rates are charged based on the premises from which you operate and are used by the local council towards their expenditure. Unless your business operates out of a domestic dwelling, you are almost certainly liable for business rates – especially if you operate a shop, workshop or office.
How Are Business Rates Calculated?
Business rates are calculated based on the property’s rateable value which is an estimated value on the open market. This is the Valuation Office Agency (VOA) estimated values, the last revaluation is of the 1st April 2015.
Business Rates vary depending on where in the UK you are based. In 2014-15 to 2017-18 there have been an increase across the majority of the UK. With the City of London seeing an increase of 35.5%.
You can estimate your business rates by multiplying the rateable value by the latest ‘multiplier’ set by the Government. If your property is eligible for business rates relief, this will then be reduced from the bill.
Are There Exemptions To Business Rates?
As mentioned prior, if you work out of a spare room at home, you probably will not have to pay business rates. But if you have a garage/shed conversion, or dedicate a whole room to your business, you may be liable. If you’re unsure, we recommend you seek additional guidance from our team.
Not only are certain properties exempt, but there are also industries that are not required to pay business rates for their buildings.
Buildings Exempt From Business Rates Include:
- Agricultural land and buildings including fish farms.
- Churches and other registered places of worship.
- Buildings used for the welfare of disabled people or training purposes.
If your business does not fall into one of these categories but: your property’s rateable value is less than £15,000 and/or your business only uses one property – you may still be able to claim business rates relief. You can contact your local council to apply for business rate relief.
Small Business Rate Relief
Small Business Rate Relief (SBRR) is one of most interest. If your property with a rateable value is of £12,000 or less, you will not be required to pay business rates. There is a sliding scale in place for properties with a rateable value of £12,001 to £15,000, the rate of relief will go down gradually from 100% to 0%. After that your business is liable for the full amount.
If you are a small business but not eligible for the small business rate relief, mentioned above. But your property in England has a rateable value below £51,000 – your business rate bill will be calculated using the small business multiplier, which is lower than the standard one.
With other relief schemes also concurrently available, calculating your business rate tax can be complicated – make sure you get professional advice from an experienced SME accountant, to help you decide which relief you may be eligible to apply for. At 3 Wise Bears, our SME Accountants can help with your enquiries. Get in touch today.
