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Business Rates: Key Terms and Reliefs

Business Rates (Non-Domestic Rates) is a property tax based on the size and rental value of commercial property at or around a specific date.

 

Covid-19 Business Rates Updates

Visit our News pages for the latest Business Rates announcements in England and Scotland.

 

The following is a list of key terms and rates reliefs available:

Appeals

An appeal against a net annual value (NAV) and  rateable value (RV) is permitted where the Scottish Assessors Association (SAA) or in England the Valuation Office Agency (VOA) makes a change to the value. In Scotland, an appeal is also permitted where there is a change of owner, tenant or occupier. In addition, an appeal can be lodged where it can be proved that a particular Material Change of Circumstances has occurred which has an adverse effect on value. It should be noted there are strict timescales with regards to lodging appeals both north and south of the border. Members of our rating team can explain these fully. Contact lynsey.russell@ryden.co.uk or lorna.greig@ryden.co.uk.

Furthermore, business rates 'appeals' can be submitted to the relevant Local Authority Finance Department on the basis that the rates bill is incorrect. This may include bills that are incorrectly calculated, notified to the wrong ratepayer or where relief should be applied. Our team is experienced in carrying out this exercise on behalf of clients.

Rateable Value (RV)

The relevant Assessor or VOA will inform the owner and tenant of a property what the rateable value (RV) is at the beginning of a new Revaluation or if there has been a change in the NAV/RV, by issue of a Valuation Notice. The RV is usually based on the area and appropriate rental rate per square metre at the tone date of the property, but exceptions exist (e.g. licensed premises or hotels based on turnover); specialist buildings may be valued on a ‘contractor’s basis’ (cost method).

Rates Bill (Rates Liability)

The rates bill will be issued by the local Council and is usually split into 10 monthly payments but requests can be made to split this over 12 months.  Non-payment of rates may result in full payment being requested as well as fines. The calculation for a bill is: RV x Uniform Business Rate (UBR)  (you can use our calculators). Various reliefs may then be applied to calculate the final bill payable. For 2020/21 there is a 1.6% relief applied to all RVs in Scotland to reflect the impact of Covid-19.

Rates Mitigation

Mitigating the cost of business rates for unoccupied properties has become vital since the recent reduction in relief when a property becomes vacant. There are opportunities to mitigate against this liability and savings to be made from reviewing alternative uses or charitable occupation of properties where such potential occupiers have a property requirement.

Rating Revaluation

This generally happens every five years but the Government postponed the 2015 Revaluation until 1st April 2017. The reason for regular Revaluations is to reflect market changes in rents throughout the country and in different sectors. Property owners and tenants have a right to appeal the rateable value if they believe it is incorrect. The next Revaluation in Scotland will be in 2023 and three yearly thereafter. In England it is also 2023.

Uniform Business Rates

UBR is a multiplier used to calculate business rates liability. The UBR increases annually with an inflationary uplift.

Scotland UBR 2020/21

  • 49.8p (for properties with a RV less than or equal to £51,000)
  • 51.1p (for properties with a RV of £51,000 to £95,000)
  • 52.4p (for properties with a RV greater than £95,000)

For 2020/21 relief of 1.6% is applied to all commercial premises RVs.

England UBR 2020/21

  • 49.9p (for properties with a RV of less than £51,000)
  • 51.2p (for properties with a RV greater than or equal to £51,000)

London UBR 2020/21

  • 49.9p (for properties with a RV of less than £51,000)
  • 51.2p (for properties with a RV greater than or equal to £51,000)
  • Subjects within the city of London have a 0.008p supplement
  • Subjects within greater London have a 2p Crossrail addition where RV> £70,000

Valuation Notice

Landlords, tenants and occupiers will receive a Valuation Notice if there is a change to the property, if a landlord, tenant or occupier carries out any works which affect value (the Notice will detail the new value). The process/timescale for making an appeal will be outlined in the Valuation Notice.

Valuation Roll

The Valuation Roll is produced and maintained by the Valuation Boards of the various Local Authorities.  It sets out the RVs of all land and buildings and in some cases, the areas and rates applied.  The Roll is a public document and is available to search online.  In England, the Valuation List is available via the Valuation Office Agency and in Scotland from the Scottish Assessors Association.

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RATES RELIEF

The are numerous types of rates relief.  Some are available in both Scotland and England but there are variances and they are applied differently.

  • Small Business Bonus Scheme (Scotland)
  • Small Business Rates Relief (SBRR) (England)
  • Vacant Rates Relief (Empty Property) Scotland
  • Vacant Rates Relief (Empty Property) England
  • Charitable Relief
  • Community Amateur Sports Clubs (CASC)
  • Disabled Relief
  • Discretionary Relief
  • Fresh Start Relief (Scotland)
  • Business Growth Accelerator (Scotland)
  • Renewable Energy (Scotland)
  • Rural Rates Relief (Scotland)
  • Rural Rates Relief (England)
  • Day Nursery Relief
  • Transitional Relief (TR)

 

SPECIAL CONDITIONS 

Business Improvement District (BID)

A BID is a business-led and business-funded body formed to improve a defined commercial area. A levy is payable by companies located in a BID area which will be run as a not for profit organisation.  This will manage and deliver projects and services to make the area a better place to work and in which do business.

Enterprise Zone/Area

These are locations designed to encourage business investment while providing support for start-ups to become established.  Incentives such as reduced rates are available in these locations, which tend to be sector focussed.

Exempt Properties

Agricultural land & buildings; fish farms; public parks, consulates and embassies are exempt from entry in the Valuation Roll.  This means they do not pay non-domestic rates.

When certain properties become vacant, they are exempt from paying rates.  These include Listed buildings and land or properties whose owners have gone into liquidation or administration.