Each year, the government sets aside around £1.5 billion for business rates rebates. That is an enormous figure, but there are two sides to this coin. One way to look at this is to be pleased there is a pot ready for businesses to benefit from if business rates have been miscalculated, which is, of course, positive. However, we need to ask why is this figure so high? Are business rates overpayments common? How often do businesses miss out on rebates or reductions? How do you challenge your business rates?
Businesses tend to assume they are paying the correct business rates for their premises, which is a reasonable assumption. We tend to accept how our taxes are calculated and very rarely question this. Many may even assume they would be notified, if they were paying too much. A lot of people are unfamiliar with the process of challenging their business rates.
How Is My Business Rate Calculated?
The Valuation Office Agency oversees business rates and calculates a property’s rate, which is based on rental value, its size, and its usage. Rateable values are published every five years.
A rateable value should mean it is a simple and easy system. However, often different features of buildings are not considered, and these features may often entitle a company to a lower rate.
How Do I Know If I Am on the Correct Business Rate?
The VOA has a digital system called Check Challenge Appeal through which a business can first check if their rate is correct, then challenge if they believe their rate is incorrect, and then finally appeal if the previous steps have not been successful.
Check Challenge Appeal can be difficult to navigate, but can result in huge reductions. It’s essential that businesses don’t take anything for granted, when it comes to business rates.
What Happens If My Business Rate Is Too High?
If a business goes through the Check Challenge Appeal process and is found to be overpaying on their business rates, then they may be entitled to a rebate from the beginning of the current ratings list (2017).
Will I Be Told I Am on the Correct Business Rate?
No, this is a downfall of the business rates system. Everything is held to account through the Check Challenge Appeal process and cases should be managed to strict deadlines, although there is often a backlog of requests. Businesses will not be approached to check or reduce their business rates liabilities. The company is responsible to challenge their own business rates.
The Ratings Period Is Now Three Years. Will I Be Impacted?
In the Autumn Budget of 2022, the government announced an increase in the frequency of the new ratings list, changing to three-yearly valuations. This will mean business rates are recalculated every three years. This change is meant to ensure the system is fairer and represents the wider market.
I Am Due to Modify My Property. Will This Impact My Business Rates?
Yes, if you are altering your property, this may change its rateable value. For example, if you installed air conditioning or built an extension your business rates may increase, however depending on the changes you make you can also reduce them.
So, that's your guide to challenging business rates. Not too bad right? Check out the Knowledge Hub for more helpful guides on all things tax and business.
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