Running
a business at any time can be difficult, but it
is especially so in the current economic climate.
Many start-up businesses are struggling to make
it beyond the critical first few years, as they
seek to establish themselves in the market. Even
those that have been around for longer are finding
things difficult and several widely recognised names
have been forced to shut their doors in the years
since the credit crunch hit.
Monitoring
overheads
In order to give your business the best chance of
survival it is essential to review every overhead
to see where savings can be made. The three most
costly business outgoings tend to be staff, rent
and rates. Considering staffing levels and negotiating
rental costs are obvious moves that most businesses
will take to reduce overheads. However, many will
accept their business rates without question. This
may be a major oversight and it could be that you
are able to make significant savings by making an
appeal for business rates relief.
Getting into the murky waters of business rates
relief may initially seem quite daunting and puts
many off looking further into the option. However,
once you dip your toe in, you will find that the
processes involved aren’t actually that complex.
In addition, if you are struggling, you can lean
on expert assistance to help aide your cause.
Understanding
business rates calculation
Before we move on to how you can lodge your appeal,
we should first consider how your business rates
calculation is made. The calculation can only be
done once you know what the ‘Rateable Value’
of the businesses property is.
The
‘Rateable Value’ is decided by the Valuation
Office and is an estimate of what it should cost
to rent the premises for 12 months. This figure
must then be multiplied by the Uniform Business
Rate (UBR). At time of press, the standard UBR for
England is 45.8p. This is slightly reduced for small
business to 45.0p.
If
you aren’t too great at maths then we have
provided you with a few examples to act as a guide.
Normal
business calculations:
Annual Rent x UBR = Annual
Business Rates
£20,000 |
45.8p |
£4,580 |
£12,000 |
45.8p |
£5,496 |
£15,000 |
45.8p |
£6,870 |
£20,000 |
45.8p |
£9,160 |
£25,000 |
45.8p |
£11,450 |
£30,000 |
45.8p |
£13,740 |
£40,000 |
45.8p |
£18,320 |
£50,000 |
45.8p |
£22,900 |
Small
business calculations:
Annual Rent x UBR = Annual Business Rates
£20,000 |
45.0p |
£4,500 |
£12,000 |
45.0p |
£5,400 |
£15,000 |
45.0p |
£6,750 |
£20,000 |
45.0p |
£9,000 |
£25,000 |
45.0p |
£11,250 |
£30,000 |
45.0p |
£13,500 |
£40,000 |
45.0p |
£18,000 |
£50,000 |
45.0p |
£22,500 |
It
is worth bearing in mind that the ‘Rateable
Value’ or a property is reviewed every 5 years.
Any fluctuations will of course result in a rise
or fall in your business rates. We should also point
out that any increases to the UBR may be introduced
over a period of time. As a result, your business
rates calculation could be a little more complicated.
An example of this being that the Government made
it possible for businesses to defer 60% of an increase
in 2012/13, which is then to be paid equally in
the following two business years. This is commonly
referred to as Transitional Relief.
Making
an appeal
The fact that business rates rely on a calculation
that factors in a property’s rental value
put in place by the Valuation Office means that
they are open to interpretation. This means that
if you do not agree with the annual rental estimation
you can appeal against the figure. You should take
into account any changes that may have impacted
on the Rateable Value, such as a fall in the price
of property in the local area.
Some
other factors which may impact on the Rateable Value
of your business property are:
• If the property is stood empty or is only
partially occupied
• Major building or road works in the area
which are impacting on business
• An increase in competition in the local
area
If
your business has been affected by any of the above,
or you simply feel that the Rateable Value is set
too high, you could have grounds for an appeal.
The best route now is to seek out some additional
information and guidance from a Chartered Surveyors
that specialises in business rates relief. They
will be able to review your case and, drawing upon
their knowledge of the local area, advise as to
whether they believe you have proper grounds for
appeal.
Non-traditional
business or organisations
As a final point, we’d like to make your all
aware business rates relief appeals aren’t
only open to traditional business properties, such
as retail shops and offices. Pretty much any business
can apply to have their business rates reviewed,
including restaurants, gyms, hotels and nightclubs.
Likewise, not for profit organisations, such as
charities, schools and universities can also lodge
an appeal.
