Business rates, also known as council tax on commercial properties, are a form of local taxation imposed on non-domestic properties used for commercial purposes. This includes a wide range of establishments such as shops, offices, warehouses, factories, and guest houses.
In this article, we will provide an overview of council tax on commercial properties, including payment procedures, relief schemes, rate calculations, and specific considerations for certain types of businesses.
Payment and Billing
The local council issues business rates bill annually, typically in February or March, for the following tax year.
These bills outline the amount due and the payment schedule. It is essential for property owners to promptly address any queries or concerns they may have regarding their bill with the local council.
Calculating Council Tax on Commercial Properties
Council tax on commercial properties is calculated based on the property's rateable value. The rateable value represents the estimated open market rental value of the property as of 1 April 2021.
This value is determined by the Valuation Office Agency (VOA). The VOA takes into account factors such as location, size, quality, and potential income when assessing the rateable value.
Relief Schemes
Business owners may be eligible for relief schemes that aim to reduce the burden of council tax on commercial properties. The availability and criteria for relief schemes vary depending on the region in which the property is located.
It is important to consult with the local council to determine if your business qualifies for relief schemes such as transitional relief, small business relief, or relief for retail, hospitality, and leisure properties. These schemes can significantly reduce the amount of council tax payable.
Exemptions and Exclusions
Certain properties are exempt from council tax on commercial properties. For example, farm buildings and properties used for the welfare of disabled people may be exempt.
It's important to note that the eligibility criteria for exemptions and exclusions may vary by region, and it is advisable to contact the local council or assessors to confirm any exemptions that may apply to your specific property.
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Changes in Property and Revaluation
If there are any changes to your business premises or the nature of your business, it is essential to inform the Valuation Office Agency (VOA) promptly.
Changes such as moving or making alterations to the premises, subletting part of the property, or merging multiple properties into one can impact the business rates calculation.
Reporting these changes ensures that you pay the correct amount and prevents potential backdated increases in your bill.
Working from Home
In general, home-based businesses do not have to pay business rates if only a small part of the property is used for commercial purposes or if goods are sold exclusively by post.
However, if your property is part business and part domestic, or if you provide services or employ people at your premises, you may need to pay business rates in addition to council tax.
It is recommended to contact the Valuation Office Agency (VOA) or local assessors to determine the appropriate tax liability for your home-based business.
Pubs and Licensed Trade
For pubs and licensed premises in England and Wales, the rateable value is determined by the VOA based on factors such as the type of establishment, location, trading information, rent, and turnover.
The VOA applies agreed-upon percentages to calculate the rateable value. Business rates relief may be available for eligible pubs, bars, restaurants, and cafes, as well as for pubs located in rural areas or classified as small businesses.
Self-Catering and Holiday Let Accommodation
Self-catering and holiday let accommodations are subject to business rates based on their rateable value. The Valuation Office Agency "VOA" assesses the rateable value considering factors such as the type, size, location, quality, and expected income from letting the property.
There are specific criteria regarding the number of nights the property is available for let and the number of nights it is actually let, which determine whether business rates apply. I
t is important to be aware of the regional regulations and consult with the relevant authorities for accurate information.
Seeking Professional Advice
Understanding the intricacies of council tax on commercial properties can be complex.
If you require assistance in navigating these matters, it is advisable to seek guidance from qualified professionals such as rating surveyors.
Organisations like the Royal Institution of Chartered Surveyors (RICS), Institute of Revenues, Rating and Valuation (IRRV), and Rating Surveyors Association can provide valuable advice and assistance.
Conclusion
Council tax on commercial properties is an important local tax that contributes to the provision of essential services by local authorities.
Property owners and business operators need to be aware of the calculation methods, relief schemes, exemptions, and specific considerations relevant to their commercial property.
By staying informed and seeking appropriate guidance, businesses can effectively manage their council tax liabilities and ensure compliance with the local regulations.
