How Do You Know if Your Business Rates Are Correct?

Business rates are a large expense for many companies. This can come as a shock if you’re new to business and weren’t expecting an additional large bill.

It can be an even bigger shock when you consider that many businesses pay more in business rates than they do in rent. However, how can you be sure you are paying the correct amount of business rates? Below, we’ll explain what business rates are and how you might be able to save some money on yours.

Business Rates Explained

Business rates are essentially a tax on your business premises. They are normally charged on shops, offices, pubs, warehouses, factories, or sometimes even part of a person’s home that is used solely for business. Nearly all non-domestic properties will be subject to business rates. Business rates are collected by the relevant local authority.

How Do They Work Out My Business Rates?

The business rates are calculated using the rateable value of the property, which is the rental value of the property on the open market. This valuation is performed by the Valuation Office Agency (VOA) and is reassessed every five years. The rateable value is multiplied by an amount set by the government.

Can I Save Money on My Business Rates?

It’s common for people who use good business rates advice to get a reduction in the amount they must pay. There are various reasons why business owners end up paying too much. It can be because the property is over-valued, or the size is incorrect.

Some businesses are eligible for small business rate relief, which varies depending on the rateable value of your property. If the rateable value of your property is below £12,000 you may be entitled to a 100% reduction.

There are lots of people entitled to reductions or being overcharged that never get a reduction because they are simply unaware that they are entitled to one, or that they are being incorrectly rated. Business rates are an obligatory expense for most businesses, but it doesn’t mean you should just accept the amount you’re told to pay.

What Happens if I Refuse to Pay My Business Rates?

The exact process will depend on the local council you fall under, but in most cases, the local authority will initially be understanding and try to agree a payment plan you can make work.

It’s important to maintain an open line of communication so that they are aware of your intentions. However, continued refusal to pay will usually lead to the debt being passed for collection. If debt collection is unsuccessful, most local councils will take you to court, which normally incurs more costs that you will be liable for, compounding the problem further.

Running a business can be challenging at the best of times. Reducing your overheads can be the difference between survival or shutting, whether it’s getting the best business rates advice or regularly switching energy suppliers to get the best deal – the savings can mount up.