In this brief guide, we are going to answer the question “What are rates?”. If you run a business then this may be vital information to you.

What are rates?

Rates could mean a lot of things. This could be council rates, parking rates, tax rates, business rates etc Rates simply mean the amount we pay for a particular service or privilege.

What are business rates?

Business rates are a tax on property used for business purposes.

Business rates can be charged on:

Shops

Offices

warehouses

Pubs

Business rates may also only be charged on the part of the building that is used for business purposes.

How much are business rates?

Business rates are calculated based on a property’s ‘rateable value’. The rateable value is a property’s estimated value on the open market. The last revaluation, conducted by the Valuation Office Agency (VOA) and which came into effect on 1 April 2017, refers to values as of 1 April 2015.

It is possible to estimate your business rates by multiplying your property’s rateable value by the relevant number. 

In some cases, you may end up being charged the wrong business rates or you may think the business rates you are being charged are wrong. If you think this is the case then you should check for similar properties in your area to determine what business rates they are charging.

You should also check the VOA’s website to find the relateable value for your property.

If you find that the business rates you are paying are wrong then you can apply to have them changed.

spect that the rateable value is incorrect, you can then apply to have it changed.

You can check and apply to revise your rateable value using this government tool.

What is the small business rates relief?

If you have a small business, you may be entitled to small business rate relief to reduce how much you have to pay for business rates.

To find out how much you may have to pay you can enter your business’s postcode into this business rates tool from the Valuation Office Agency.

You can read more about business rates on the gov.uk website here.

“There are a range of reliefs available for some properties. The most useful of these to small firms is the small business rate relief. This is available if your property has a rateable value of less than £15,000, and generally if your business only uses one property.

Full relief is available on properties with a rateable value of £12,000 or less. For those between £12,001 and £15,000, relief ratchets down gradually from 100 per cent to zero per cent.

If your property no longer qualifies for relief as a result of the 2017 revaluation, there are caps on the amount you will pay. Your bill will not increase by more than £50 a month until 31 March 2018.

There are other business rates reliefs available, including the rural rate relief and charitable rate relief. You can read more about these on gov.uk.”

“What if I work from home?

If you use a small part of your home for business purposes, you will not generally have to pay business rates. However, there are circumstances in which you will have to pay business rates, in addition to Council Tax. For example:

  • your property is split into domestic and business parts, for example in the case of a flat above a shop
  • you sell things to people who visit the property
  • you employ anyone at your property

If you’re in doubt as to whether or not you should be paying business rates, you should contact the Valuation Office Agency.

Business rates calculator

It’s possible to estimate your business rates bill. In order to do this, you need to find out your property’s rateable value, which you can do here.

You’ll then need to find the correct multiplier, which will depend on the rateable value. Then, deduct any reliefs to which you are entitled.

You can use the government’s business rates calculator here.”

In this brief guide, we defined what rates are. If you have any questions or comments please let us know.