Business rates in England & Wales

What is business rate?

Business rates are based on the Local Government Finance Act 2012. Business rates (also called non-domestic rates) are a kind of a property tax introduced in England and Wales in 1990. It is a tax on the occupation of non-domestic property. Tenants such as offices, shops, pubs, warehouses, factories usually pay this for their lease directly to the council if it is not covered by rent paid to the landlord.  If you occupy a building, or part of one that you use for non-domestic purposes, then you’ll probably be required to pay business rates.

What are business rates based on?

Business rates are based on the property occupation and don’t reflect the turnover or profits of the business. If a company plans to have business premises, it is important to consider it in financial planning. Properties are in a rating list with a rateable value (also RV), which is a valuation of their annual rental value on a fixed valuation date using assumptions. Business rates are calculated by multiplying the rateable value (RV) by the business rates multiplier, which is set by government.

For the 2016/17 financial year, the national small business rate relief (SBRR) multiplier was 48.4% (0.484) and the standard rate multiplier 49.7% (0.497). Local councils can set a special levy (also called business rate supplement or BRS) on top of the national rates. In Greater London area the BRS is 2% (0.020).

Business rates payments are calculated by multiplying the rateable value by the business rates multiplier, which is set by the government. For example, a small business with a rateable value of £10,000 in England must pay £4840 or 48.4% of the rateable value as a local tax each year.

What is the Valuation Office Agency (VOA)?

Valuation Office Agency is a UK Government Executive Agency. Rating lists are created and maintained by the Valuation Office Agency.

How to register for business rates?

All non-domestic property occupiers should register with their local council. Information can be found on the government website and a local council allocation can be found by post code

How to pay business rates?

The local council will send an invoice in February or March each year to businesses registered for business rates. The invoice is for the following tax year. Businesses might be able to pay their bill in 12 instalments.

What are business rates relief schemes?

Businesses may be able to get business rates relief. Sometimes this is automatic, but businesses may need to apply through the local council.

If you are a small business owner, you might be eligible for rate relief through the government’s Small Business Rate Relief Scheme (SBRR)

In England, you can get a small business rate relief if you only have one property with a rateable value of less than £12,000 (Year 2016/17). If your property has a rateable value of £6,000 or less you will be get 100% relief from business rates.  The percent figure will gradually decrease from 100% for properties with a rateable valued between £6,001-£12,000.

You can still qualify as a small business if your property has a rateable value of below £18,000 or £25,500 for greater London. In this case your business rates will be calculated using the small business multiplier instead of the standard multiplier. The standard multiplier for small business in England for 2016-17 is 49.7% (0.497)