A Detailed Guide To Council Tax Business Rates

Business rates, also known as non-domestic rates or council tax business rates, are a tax on non-residential properties such as shops, offices, pubs, warehouses, factories, and even self-storage units. These rates are collected by local authorities to help fund local services such as schools, roads, police, and fire services. In this article, we will take a closer look at council tax business rates, how they are calculated, and what businesses need to know about them.

Business rates are calculated based on the rateable value of a property, which is assessed by the Valuation Office Agency (VOA). The rateable value represents the rental value of a property as of a specific date, which is typically set by the VOA every five years. The current valuation date is April 1, 2017, and the rateable values based on this date are used to calculate business rates for the 2017-2022 period.

The amount of business rates that a business has to pay is calculated by multiplying the rateable value of the property by the multiplier set by the government. The multiplier consists of two parts: the standard multiplier and the small business multiplier. The standard multiplier is set by the government and applies to properties with a rateable value above a certain threshold, while the small business multiplier is a lower rate that applies to properties with a rateable value below a different threshold. For the 2021-2022 tax year, the standard multiplier in England is 51.2p and the small business multiplier is 49.9p.

Business rates can be a significant expense for businesses, especially for those with properties in prime locations or with high rateable values. However, there are some relief schemes available to help businesses reduce their business rates liability. The most common relief schemes include small business rate relief, rural rate relief, and charitable rate relief.

Small business rate relief is available to businesses that occupy only one property with a rateable value below a certain threshold. Eligible businesses can receive up to 100% relief on their business rates, depending on the rateable value of their property. Rural rate relief is available to businesses in designated rural areas in England and can provide relief of up to 100% on business rates. Charitable rate relief is available to registered charities and can provide up to 80% relief on business rates for properties that are used for charitable purposes.

It is important for businesses to apply for these relief schemes if they are eligible, as they can provide significant cost savings. Businesses can apply for business rates relief through their local council, and the process is usually straightforward. However, businesses should make sure to keep up with any changes to the relief schemes to ensure that they are receiving the appropriate relief.

Business rates are a complex and often contentious issue, with many businesses feeling that they are unfairly burdened by the tax. The government has acknowledged these concerns and has announced several measures to help alleviate the pressure on businesses. In response to the COVID-19 pandemic, the government introduced a business rates holiday for businesses in the retail, hospitality, and leisure sectors for the 2020-2021 tax year. The government has also announced plans to reform the business rates system to make it fairer and more sustainable in the long term.

Overall, council tax business rates are an important consideration for businesses with non-residential properties. Businesses should be aware of how business rates are calculated, what relief schemes are available, and how they can reduce their business rates liability. By staying informed and taking advantage of the relief schemes, businesses can effectively manage their business rates and ensure that they are not overburdened by this tax.