Calculating Your Business Rates

Just like residents pay council tax, businesses have to pay business rates to the local authorities; this money is then used to help finance local services. This blog will help give you a better understanding of what your small business has to pay and how to calculate these business rates.

Author: Charlotte Cobley

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Business rates otherwise known as non-domestic rates – are tax on properties used for business. E.g. shops, offices, warehouses, pubs and factories. These taxes help pay for borough services such as police and fire brigade.

Who pays business rates?

The main occupier of the property is responsible for paying business rates; this is usually the owner or the leaseholder. If you use a building for a non-domestic purpose, you have to pay these rates. If you work from home, you may have to pay business rates on the area of the house that is used for work purposes. If a room of your house has been adapted purely for work purposes, e.g. if you have turned your spare bedroom into beauty salon, you will have to pay business rates.

Calculating your business rates

A bill will be sent to the property used for your business, addressed to the person responsible for paying it. However, you may want to check you’re paying the right amount or plan your financial year in a new property and you may be unsure of the business rates, knowing how to calculate your business rates can be useful.

The council multiply the rateable value of your property by a multiplier known as poundage. These are reviewed every year by the government due to inflation. To calculate your business rates:

• Search for your rateable value by postcode using the Valuation Office Agency.

• Find the correct multiplier for the size of your business and location and ensure it is the current multiplier by checking here

• Now using these details multiply your rateable value with the correct multiplier.

Who doesn’t need to pay business rates?

Certain buildings are exempt from business rates, such as farm buildings and land, fish farms, buildings used for training or welfare of disabled people and places of public religious worship. If your business is empty for the first three months you become exempt from business rates, warehouse and industrial properties are exempt for six months.

 Small business rate relief

When your business rate is below £15,000 your business may qualify for small business relief rate (SBRR). If you occupy only one business property or the second property value is less than £2,200 you can still claim SBRR. If this applies to your business you can apply to your local authority, if your business rateable value is less than £5,000 you can qualify for up to 50% relief. Talk to your local council for more information.

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