Business Rates
What are business rates?
Business rates in England, or non-domestic rates, are a tax on the occupation of non-domestic property (National Non-Domestic Rates; NNDR). Rates are a property tax with ancient roots that was formerly used to fund local services that was formalised with the Poor Law 1572 and superseded by the Poor Law of 1601. The Local Government Finance Act 1988 introduced business rates in England and Wales from 1990, repealing its immediate predecessor, the General Rate Act 1967. The act also introduced business rates in Scotland but as an amendment to the existing system, which had evolved separately to that in the rest of Great Britain. Since the establishment in 1997 of a Welsh Assembly able to pass legislation, the English and Welsh systems have been able to diverge. In 2015, business rates for Wales were devolved.
What is the cost of Business Rates?
UK business rates are usually reviewed every five years – though this is set to change to every three years in England with the next revaluation in 2023. Business rate valuations are then calculated using set rates known as ‘multipliers’, based on the size of your property and the way it is used.
While these multipliers usually change each year, the Government has recently announced the business rates multipliers for the 2022 to 2023 tax year will be frozen. This means the standard multiplier will remain at 51.2p and the small business multiplier will remain at 49.9p.
On average, a business will pay business rates equal to 50% of their annual rent. As such, properties like a shop which has a higher rent price will likely incur a higher business rate than a stockroom.
The rateable value of your property is decided by the Valuation Office Agency (VOA) to reflect changes in the property market. With this in mind, business rates in London are generally notably higher than elsewhere in the UK. The means that revaluation is now underway for 2023. The VOA (valuation office agency) is currently contacting all businesses to request rental information – So, look out for your letter, if you haven’t already received one just yet.
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