What are Business Rates and who has to pay them?
Business Rates or Non-Domestic Rates are a local tax that is paid by the occupiers of all non-domestic / business property (in the same way that council tax is a tax on domestic property). It is collected by local authorities and is how non-domestic ratepayers contribute towards the cost of local services.
Business rates are charged on non-domestic properties, like:
- Shops
- Offices
- Pubs and Restaurants
- Warehouses
- Factories
You will probably have to pay business rates if you use a property (or part of a building) for non- domestic purposes.
Under the Business Rates Retention arrangements (introduced 1st of April 2013), authorities keep a proportion of the business rates paid locally. This provides a direct financial incentive for authorities to work with local businesses to create a favourable local environment for growth. The scheme allows local authorities to keep 50% of business rates.
The money, together with certain other sums, is used to pay for the services provided by Hertsmere and other local authorities in your area.
How are my Business Rates Calculated?
Business rates are calculated by multiplying the ratable value of the property (set by the Valuation Office Agency) by the business rates multiplier. The business rates multiplier is set annually by central government. There are two business rates multipliers:
- The standard non-domestic rating multiplier
- The small business non-domestic rating multiplier.
The former is higher to pay for small business rate relief, except in the City of London where special arrangements apply. The Government sets the multipliers for each financial year for the whole of England according to formulae set by legislation. The current multipliers are shown on the front of your bill.
What is my rateable value?
Every non – domestic property in England, unless it is exempt, has a rateable value. This amount is set by the Valuation Office Agency (VOA). The rateable value of your property will be shown on the front of your bill.
The rateable value broadly represents the yearly rent the property could have been let for on the open market on a particular date.
- Until 31 March 2017, the rateable values were based on a valuation date of 1 April 2008.
- Since 1 April 2017, the rateable values are based on the valuation date of 1 April 2015.
The valuation office maintains a list of values and may alter them if they believe the circumstances of the property have changed.
Can I appeal my rateable value?
Yes, the ratepayer (and certain others who have an interest in the property) can appeal against the value if they believe it is wrong.
If your rateable value changes as the result of your appeal, and the amount you have to pay is altered because of this, you will be sent a revised bill. In the meantime you must keep up your payments as shown on your original bill. If you don't, we will take recovery action against any arrears that build up. We will refund, with interest, any difference between the amount you have already paid and any reduction resulting from a successful appeal, but we will not pay interest if a liability order has been issued against you.
For more information please see the government explanatory notes 2019 (PDF, 175KB)
Will my rateable value change, and if so how often?
All rateable values are subject to a general revaluation. This is done to reflect changes in the property market and does not raise extra revenues.
Revaluation was historically done every five years. The Government postponed the 2017 revaluation with the intention of providing greater stability for businesses to encourage economic growth. From 2022 there will be a revaluation every three years.
What is a Transitional Arrangement?
To try and minimise the financial impact that a general revaluation may have on businesses, the government introduced Transitional Arrangements.
Transitional Arrangements aim to ‘phase in’ any adjustments to the amount payable by a business. The principle behind this scheme is to ensure that businesses will not be expected to pay, or receive a reduction in their bills, by more than a pre-set percentage each year (determined by Central Government). Transitional arrangements are automatically applied and are shown on the front of your bill.