Navigating business rates can seem quite daunting and complicated at first glance. We’ve created this guide to answer the most frequently asked questions we receive.
What are business rates?
How are business rates calculated?
What is ‘rateable value’ and how do you check it?
What is the Valuation Office Agency (VOA)?
Can you negotiate or appeal business rates?
Who is responsible for paying business rates?
Are business rates included in leased office rental prices?
Are business rates included in a coworking or serviced office?
How do I pay business rates?
Do you pay business rates if you sublet office space?
How often are business rates revalued?
How can I reduce my business rates?
What is small business rate relief, and when can you apply for it?
What is rural rate relief?
What is empty property relief?
How do business rates in London compare to the rest of the UK?
How does moving office affect business rates?
Where can I find support or advice about business rates?
How can I avoid mistakes with business rates?
What are business rates?
Business rates are a tax on a property being used for business purposes. Whether that property is used as an office, a shop or a factory, it can be liable for business rates.
How are business rates calculated?
Business rates are calculated based on a property’s ‘rateable value’ as of a fixed date set by the Valuation Office Agency (VOA). The value is then multiplied by a rate set annually by the UK Government.
What is ‘rateable value’ and how do you check it?
The rateable value represents the yearly rent the property could have been let for on the open market. The rateable value of any commercial building can be found on the Valuation Office Agency's (VOA) website.
What is the Valuation Office Agency (VOA)?
The Valuation Office Agency (VOA) is a government body in England and Wales that assesses all commercial properties for council tax and business rates purposes.
Can you negotiate or appeal business rates?
Business rates are usually non-negotiable. However, if tenants believe that their property’s rateable value is incorrect, they may appeal it by providing evidence to the Valuation Office Agency.
Who is responsible for paying business rates?
Usually, the occupier of the premises is responsible for paying business rates. In an office has been rented out, then its typically the tenant renting the space rather than the landlord.
Are business rates included in leased office rental prices?
No, in leased spaces, business rates are not included in the office rental price and are paid separately.
Are business rates included in a coworking or serviced office?
Yes, in a coworking space or a private serviced office, the cost of business rates is factored into the all-inclusive cost.
How do I pay business rates?
If you’re in a leased office, your local council will send you a business rates bill every year in February or March. This will be paid directly to the council, either annually, quarterly, or monthly. The arrangement will be outlined in your bill.
If you’re renting a serviced office, as mentioned, your business rates are part of the all-inclusive price, so you will be paying the equivalent of your business rates to your serviced office provider.
Do you pay business rates if you sublet office space?
Yes. Depending on the terms of the sublease, business rates are either paid by the tenant or the subtenant.
How often are business rates revalued?
Every five years, business rates are revalued to reflect changes in the market. This ensures that the rates accurately reflect the current value of the property.
How can I reduce my business rates?
You can reduce your business rates by checking if you are eligible for reliefs or exemptions. These reliefs include charitable rate relief, small business relief, or rural rate relief.
What is small business rate relief, and when can you apply for it?
Small business rate relief is a discount available to businesses that occupy a property with a rateable value of £15,000 or less. Businesses can apply for this through their local council.
What is rural rate relief?
Rural rate relief is another type of business rate discount which applies to companies renting office space in areas with a population of 3,000 or less. To qualify for 100% relief, businesses must be the only kind in their village, for example, the only consultancy or law firm.
What is empty property relief?
Empty property relief is a type of business rates relief offered for commercial properties that have been empty for at least three months starting from the date the property became vacant.
How do business rates in London compare to the rest of the UK?
Business rates in London are often higher than those in the rest of the UK due to higher property values and rental costs. For example, office space for rent in London can have a greater rateable value than a similar workspace in another UK city or rural area.
How does moving office affect business rates?
Moving offices will affect your business rates if the new property has a different rateable value or qualifies for different reliefs. Before relocating, it is important to understand how your business rates may change.
Where can I find support or advice about business rates?
Local councils, commercial property experts and tax advisors can offer guidance on how to manage and possibly reduce your business rates.
How can I avoid mistakes with business rates?
Firstly, it is essential to ensure that all your assessments are accurate. Once you have accurate assessments, if eligible, you should then apply for reliefs. To avoid overpaying or underpaying, make sure you stay informed about any potential changes to the business rates system.
The above guide will have covered all the most frequently asked questions about business rates, helping you manage a regularly overlooked expense associated with renting office space.
