In order for an entrepreneur to set up and operate a business in this country, you will need to know about and understand business rates. So, what exactly are business rates and why are they important? Business rates are a tax paid on a non-domestic property that is used for professional purposes. They are comparable to council tax in that a business pays to the local authorities in order to finance local services.
Paying Business Rates
It will be the owner or leaseholder that is responsible for paying business rates and if the building has both domestic and non-domestic purposes (such as a convenience store with a flat above) then you will need to pay business rates but only for the part of the building used for business. If you operate a home business, you will need to pay business rates (in addition to Council Tax) if you have an area specifically for business, if you sell to people who visit the property or if you employ anyone at the property.
How They are Calculated
Business rates are calculated as per the property’s “rateable value” – this is the property’s estimated value on the open market with the last revaluation coming into effect on 1st of April 2017 with values from 1st of April 2015. The values take into consideration the size of the property and its usage. A multiplier is the number of pence per pound of the rateable price that you pay in business rates before discounts or relief are deducted. These are evaluated annually in line with inflation. To calculate your business rates, you will need to multiply the rateable value for your business with the multiplier.
Checking Your Rates
It is important for business owners to calculate their business rates to make sure that they are paying the right amount, plus it allows you to plan your finances for the year ahead. If you think that your rate is wrong then you can apply to have your business rates revised via this tool. It is a good idea to use a real estate advisory led business like GVA to ensure that you are paying the right amount from the get-go.
It is also important to be aware of a range of reliefs for certain properties. Small business rate relief, for example, is available to any property with a rateable value of less than £15,000 while full relief is available on properties with a rateable value of £12,000 or less.
It is important for every business owner to be aware of business rates so that they can make sure that they are paying amount while also working this into their financial strategy for the year. It is an important factor to consider if you are moving premises and you should always calculate to make sure that you are paying the right amount.