Rural business owners and farmers with diversified enterprises are advised to check the implications of their Business Rate revaluation now, so they can seek advice if their figures need to be challenged.
The Valuations Office Agency (VOA) has reassessed the Rateable Value (RV) of every commercial property in the country with the new rates due to take effect from 1 April 2017.
It will be the first time in seven years that the rates will have changed, and while some people may benefit from a decrease, there is already evidence that some rural businesses could be facing steep increases.
Nick Bramley, an Associate in the Land Management Department of the Harrogate office of Strutt & Parker, said that media reports may have led rural business owners to expect Business Rates to fall away if they are not near London and the South East.
However, he has already seen a number of rural businesses – running pubs, farm shops, offices, livery yards and storage facilities – looking, in some cases, at a rise in RV of 50-100%.
“The VOA published draft rates on its website at the end of September and I would urge commercial property occupiers to check them as soon as they can. Here in Yorkshire, we are tending to see both small and large increases have been applied, rather than reductions.”
Mr Bramley said that the RV relates to the measurable area of the premises – so this will need to be checked carefully – and to a hypothetical April 2015 rental value.
“This is the area which is causing the most debate as hypothetical rates are rarely the same as the actual rent at the time and are unlikely to reflect individual circumstances.”
Strutt & Parker hold a substantial database of information on rents, so it could help clients decide whether they should seek a reduction in the draft RVs, he said.
“This could involve arguing that the rate per square metre adopted for the property is too high or by proving that the floor area used by the VOA in its calculation is incorrect. It is going to be difficult for owner-occupiers to make that assessment themselves in isolation.
“Although appeals will not be considered until April 2017, changes to the appeal system suggest this could be a long process, therefore it will be best to start it as soon as possible.”
When people look at their RV, they need to remember that it is not the same as their final Business Rates bill, added Mr Bramley.
“The percentage of the RV paid is known as the Uniform Business Rate (UBR) and is currently around 50%. There are also a number of reliefs which businesses might be able to take advantage of which we are exploring for clients.”
For example, Small Business Rate Relief will be available for businesses which only use one property and if the RV is less than £15,000. The relief will be 100% where the RV is £12,000 and on a sliding scale if the RV is between £12,001 and £15,000.
If there are additional properties, Small Business Rate Relief will not be available where the RV of any other properties is greater than £2,600.
Following the Chancellor’s Autumn Statement Rural Rate Relief is set to increase to a fixed 100% relief for businesses in a rural location with a population of less than 3,000.
To be eligible, the business needs to be the only village shop or post office in that location and have an RV up to £8,500, or the only public house or petrol station and have an RV of up to £12,500.
When a property becomes empty, full Empty Buildings Relief should be available for the first three months and then full Business Rates take effect after this. However, there are cases where the exemption can be extended. Industrial buildings benefit from six months’ relief.
Material Change in Circumstance (MCC) relief should be available if a significant activity in the vicinity affects the business, such as building, road works or flooding.
Business Rates continue not to be payable on farm buildings, agricultural land, buildings used for training and the welfare of disabled people and places of public religious worship.