Identifying opportunities to make savings on your business rates liability now, plus reviewing the implications of both the approaching 2017 Revaluation and the recent Budget.
It seems that there has never been a busier time in the business rates world! New annual rate demands are being issued this month, so it is timely to consider whether appeal action is required to minimise your business rates liability. I will also look at wider issues with the forthcoming 2017 Revaluation and the changes to the business rates system announced in this month’s Budget.
As a primer, it would be worth your while looking at my earlier post – Top 6 business rates tips for new office occupiers.
Your Business Rates Liability – Opportunities for Savings
Ensure that general appeal action is taken wherever necessary but there may be recent changes to your property or the locality which may provide an additional opportunity to obtain savings. Examples are set out below:
- Appeals for a temporary reduction in assessment:
Building works nearby or within the property.
Accessibility affected by roadworks or changes in transport provision.
- Empty rate relief:
Obtaining relief if accommodation is under-utilised or vacated (in whole or in part) on a permanent or temporary basis.
Relief in situations of a phased occupation or vacation.
Intermittent occupation schemes if a property is vacant for a long term period.
- Property undergoing works or in a state beyond economic repair:
Deleting the assessment or reducing the rateable value to a nominal figure.
2016/17 Rate Demands
Annual rate demands are now being issued by billing authorities. Business rates liability calculations can be complicated with differing levels of rating multiplier and an array of surcharges and reliefs. It is important that all demands are checked as errors are often found.
The Uniform Business Rate is now 0.497 which applies to properties with a rateable value of £18,000 or over (£25,500 in London).
12 Instalments instead of 10
Ratepayers can elect to pay the annual rates bill in 12 monthly instalments instead of 10. This is not an automatic arrangement – a formal application is required. Once a request has been made, the arrangement for 12 monthly instalments will carry forward into future years unless an alternative approach is requested.
2017 Rates Revaluation
The next revaluation will take place in 2017, with the new rateable values being based on rental levels at the valuation date of 1st April 2015.
The next business rates revaluation will be in 2017, based on rental levels on 1 April 2015
The countdown is as follows:
|March 2016||New 2016/17 rate demands are issued.|
|January 2016 to June 2016||The Valuation Office Agency (VOA) should complete the valuation process for the 2017 Rating List.|
|30th September 2016||The draft 2017 Rating List is published showing the proposed assessments to come into effect from 1 April 2017. Representations can be made to the VOA at this stage.|
|Autumn / Winter 2016||The announcement of the Uniform Business Rate for the 2017/18 rate year, along with confirmation of any transitional adjustment charging arrangements. At this stage, it should be possible to provide accurate forecasts of future rates payable figures.|
|1st April 2017||The 2017 Rating List is released. There will be a formal right to challenge the new assessments from this date.|
It is likely that a new Check, Challenge, Appeal regime will be introduced for dealing with appeals from 2017 onwards. New regulations this year should provide the fine detail.
Requests for Information
The Revaluation process involves the gathering of rental evidence and we are currently seeing large numbers of formal Requests for Information being issued by the Valuation Office. These seek detailed information and the answers provided can influence the level of rating assessment applied to the property.
There has been a raft of changes announced in this month’s Budget, with heavy emphasis being placed on assisting small businesses.
The main announcements relate to changes coming into effect from April 2017 and are as follows:
- Increased Small Business Rate Relief meaning that businesses with a property with a rateable value of £12,000 and below will receive 100% relief. There will be tapered relief for businesses with a rateable value between £12,000 and £15,000.
- Increased threshold for the standard business rates multiplier to a rateable value of £51,000.
From April 2020, the annual indexation of business rate increases will be calculated with reference to the CPI measure of inflation, rather than RPI as presently.
From April 2020 business rate increases will be based on the CPI inflation measure, rather than RPI
There is a stated intention to consider the introduction of more frequent business rate revaluations to at least three yearly. A discussion paper will be published in March 2016 outlining various options.
The business rates system is widely criticised and the changes go some way to improving the position for ratepayers. We will provide notification of further major changes when these are announced.