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Business rates: a 2-minute guide for startups

 
 
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Information on multipliers, calculation and relief.

Read time: 2 minutes

  • Business rates and their calculation explained
  • What to do if you think your business rates are incorrect
  • Understanding who is eligible for relief

Business rates are a tax on non-domestic properties such as shops, offices, pubs, warehouses and similar operations. This short guide will explain everything you need to know about business rates including who has to pay, how you can calculate your business rates and also organising a revaluation.
 

How and when are business rates collected?

Business rates are collected and administered by local authorities, who will send you a business rates bill in February or March for the tax year. They may be charged even when only part of a building is used for non-domestic purposes.

How your business rates are calculated

To estimate businesses rates you must first know the ‘rateable value’ of a property. The rateable value is the open market rental value of the property on 1 April 2015, based upon an estimate by the Valuation Office Agency (VOA), an agency of HMRC. The current rateable value was set on 1 April 2015 with the new valuation due to come in on 1 April 2022, delayed by a year due to the pandemic.

There are four steps to estimating your business rates:

  1. Find the rateable value of your business by visiting the VOA’s website.
  2. Use the standard multiplier if your business is valued above £51,000 or more.
  3. Multiply your rateable value by your multiplier.
  4. Deduct any business rate relief you’re entitled to.

 

Year Standard multiplier Small business multiplier
2019 to 2020 50.4p 49.1p
2018 to 2019 49.3p 48.0p
2017 to 2018 47.9p 46.6p
2016 to 2017 49.7p 48.4p

If you think your rates are wrong

If you have reason to believe your valuation is incorrect the VOA recommends that you first compare it to properties in your area that are of similar age, size and character. The VOA will likely ask you to provide rental information about your property so that they can update or amend the rateable value. Small businesses or startups looking to appeal the rateable value should get in contact with the VOA here.
 

Are you eligible for business rates relief?

Some properties are eligible for discounts on business rates from the local council—this is called ‘business rates relief’.  You can contact your local council if you believe you’re eligible for small business rate relief, rural rate relief, charitable rate relief, enterprise zone relief, hardship relief, retail discount, or local newspaper relief. Hardship relief is only available to businesses able to prove they would be in financial difficulties without it.
 

Rates relief for retail, hospitality and leisure

Due to the Covid-19 pandemic, UK businesses operating in the retail, hospitality and leisure sectors do not have to pay businesses rates during the 2020/2021 tax year. This business rates holiday can be applied to bars, shops, restaurants, cinemas, cafes and more. As part of its 2020 Budget, the government proposed a major reform of business rates and launched a formal call for evidence that may improve its effectiveness.

The information contained in this article is correct at the time of publishing. We recommend that you carry out your own independent research to understand your own business rate and relief criteria.

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