Are there any business rate exemptions?

In some cases business rates exemption applies; If a property is empty and unused business rates do not need to be paid for the first three months (or six months for industrial premises).

If there is a change of owner during or after the exemption period, then the exemption period does not re-commence. The new owner may benefit from any remaining time within the three-month period but if this time has elapsed they will be immediately liable to pay an empty property rate. However, the property may still be eligible for business rates appeal.

After the exempt period, an empty property rate, which is 100% of the normal bill becomes payable. To qualify for a new exemption period the property must have been occupied continuously for six weeks prior to it being vacated again. For small properties with rateable values less than £2,900 and for listed properties there is no charge for empty property rates, even after the first three months have passed.

How are your rates are calculated?

Business rates are worked out based on your property’s ‘rateable value’. This is its open market rental value on 1 April 2015, based on an estimate by the VOA

You can estimate your business rates by multiplying the rateable value by the correct ‘multiplier’ (an amount set by central government).

Your bill will be reduced if your property’s eligible for business rates relief or business rates exemption.

What are the rules for pubs and licensed trade?

In England and Wales, the Valuation Office Agency (VOA) works out your rateable value based on the annual level of trade (excluding VAT) that a pub is expected to achieve if operated in a reasonably efficient way.

This is called ‘fair maintainable trade’ and it’s based on:

  • the type of pub or licensed premises
  • the area it’s in
  • the services it offers, for example food, gaming or sports screenings

The VOA also looks at rents and turnovers to work out the fair maintainable trade figure, then applies a percentage to work out the rateable value.

Do I need to pay business rates?

Business rates are charged on businesses that occupy non-domestic or commercial properties. The property occupier, the owner or the leaseholder, must pay the business rates.

Similarly, if you use a building or part of a building for business purposes, the part used for business will require payment of business rates e.g. a shop with a residential flat above it, or if you work from home, you may have to pay business rates on the section of your house that is used for work purposes.

You’re more likely to have to pay business rates if a room is exclusively used for business, or if it has been adapted for work purposes.

Which properties are liable for business rates?

Generally, business rates are payable on most commercial or non-domestic properties.

For example shops, offices, factories, distribution units and hotels. Self-catering accommodation such as holiday homes is also liable for business rates. This applies where they are available for use by short stay guests for 140 days or more per year. However, these properties may also be eligible for business rate appeal.

There is no liability to pay business rates on the following properties:

  • churches
  • public parks
  • farmland and buildings
  • moorings
  • sewers

What is rateable value?

Rateable value is the value given on premises by the Valuation Office Agency, based on its probable annual market rent.

These values are reviewed every five years and take the size of the property and its usage into consideration. Additionally, different parts of the premises may be valued at different levels, the latest figures are estimates of the property’s open market rental value as of 1 April 2015.

Business rates are calculated by multiplying the rateable value of a business property with the ‘multiplier’, also known as ‘poundage’, set by the government.

This figure is calculated before any business rates relief or discounts are deducted and is reviewed every year by the government in line with inflation.