Business rates, also known as non-domestic rates, refer to the charges levied on individuals or entities occupying commercial properties to support the funding of local services. Local authorities are responsible for the administration and collection of these rates.
Since the implementation of the business rates retention arrangements in April 2013, local authorities have been allowed to retain a portion of the business rates collected in their area. This setup creates a direct financial incentive for these authorities to collaborate with local businesses, fostering a conducive environment for growth. As a result, any increase in business rates revenue due to growth benefits the local authorities.
The revenue generated from these business rates is then channelled towards funding various services provided by the council. This system plays a crucial role in ensuring the availability and maintenance of essential public services.
For more comprehensive details about the intricacies of the business rates system, you can find additional information on the GOV.UK website. Exploring the website will provide you with a more in-depth understanding of how business rates are calculated, the specific procedures for payment, and how they contribute to local development and welfare.
Payment responsibilities for business rates typically fall on the occupiers of properties listed in the Valuation Office Agency's (VOA) business rates database. These rates are applicable to various commercial (non-domestic) properties, including shops, offices, pubs, warehouses, factories, holiday rental homes, and guest houses.
Even in cases where the property is unoccupied, there is still a charge that needs to be settled by the owner, leaseholder, or freeholder in most instances. It's essential to note that business rates remain applicable to properties regardless of their occupancy status.
As a result, it is the obligation of the occupiers, or the property owners, to ensure the payment of business rates in accordance with the Valuation Office Agency's assessment and regulations. The charges serve as a vital source of revenue for local authorities and contribute to the provision of various essential public services and facilities. Therefore, it is crucial for all relevant parties to fulfill their payment responsibilities promptly and in compliance with the relevant laws and guidelines.
Business rates are calculated based on several factors determined by the Valuation Office Agency (VOA). The VOA assesses the rateable value of your business premises, which is essentially an estimation of its open market rental value. To find out the rateable value of your property, you can use the online facility provided by the VOA.
The actual amount of business rates you need to pay is derived by multiplying the rateable value by a specific 'multiplier' determined by the government. Additionally, relevant reliefs and reductions may be applied to the final calculation.
On your bill, you can find the current multipliers clearly displayed. These multipliers are set by the government for the entire country and are two in number: the standard rating multiplier and the small business multiplier.
It is important to note that before the start of each financial year, the government reviews and sets these multipliers for all eligible properties across England. These multipliers play a pivotal role in the determination of the business rates you will be liable to pay during that financial year.
Calculating business rates can seem complex due to the involvement of various factors, but in essence, it involves evaluating the rateable value of your property and applying the appropriate government-set multiplier while considering any eligible reliefs and reductions.
The system is designed to ensure fairness and accuracy in business rate assessments, while also taking into account the varying circumstances of different businesses and properties. So, the more accurately the rateable value reflects the open market rental value, and the more relevant reliefs and reductions you are eligible for, the more optimized and beneficial the final business rate calculation will be for your specific situation.
In the realm of business rate bills, the payment process typically adheres to a 10-month cycle by default. Nevertheless, the government has implemented regulations designed to empower ratepayers with the option to request their local authority to facilitate payments through a more convenient 12 monthly instalments. This move aims to provide businesses with greater flexibility in managing their financial obligations, catering to their individual cash flow requirements. By availing themselves of this opportunity, ratepayers can better align their payment schedule with their specific business needs, promoting a smoother and more sustainable approach to fulfilling their business rate responsibilities.
At the base of shaping the trade rates bill for a property puts a direct calculation: the rateable value of the land or property is multiplied by the appropriate non-domestic multiplier. There are two distinct multipliers in play:
The national non-domestic rating multiplier, applicable to most properties, which is set by the government each financial year. However, it's important to note that the City of London operates under special arrangements regarding this multiplier.
The small business non-domestic rating multiplier, designed to aid smaller enterprises. a person liable to pay rates residing in a land or property with a rateable worth not greater than £50,999 (and not entitled for explicit compulsory reliefs or responsible for uninhabited property rates) have their bills deliberated using this lower multiplier rather than the national non-domestic rating multiplier.
The value of the multiplier for a given financial year is derived from the previous year's multiplier, with adjustments made to reflect the Consumer Price Index (CPI) inflation figure for September preceding the billing year. For the most current multiplier values, please refer to the front of your business rates bill.
The Rateable Value is a crucial factor in determining business rates for non-domestic properties, excluding those eligible for exemptions. This value is determined by the Valuation Office Agency (VOA), which operates under Her Majesty's Revenue and Customs.
The VOA continues to use an all-inclusive list of all rateable amounts, and you can identify the rateable value of your domestic or commercial building on the front of your bill. Essentially, this value reflects the estimated yearly rent the property could have garnered had it been let on the open market, considering a specific date as mandated by the legislation. For the present rating list, this date was fixed as 1 April 2021.
It's important to note that the Valuation Office Agency holds the authority to modify the valuation if circumstances surrounding the property change. Moreover, not only the ratepayer but also certain individuals with an interest in the property can review and contest the valuation if they believe it to be inaccurate.
For more detailed information about the grounds for filing challenges and the process to do so, you can refer to the VOA website. Stay informed and ensure your rateable value accurately reflects the property's worth.
Introducing the 2023/24 Rating Multiplier Update! This year, the Government has unveiled two distinct multipliers designed to cater to different business categories: the Small Business Non-Domestic Rate Multiplier stands at a competitive 0.499, while the National Non-Domestic Rate Multiplier follows closely at 0.512.
Rate Multiplier for London, England
Within the City of London, businesses will also be subject to two unique multipliers. Small businesses can take advantage of a favourable rate set at 0.513 (equivalent to 51.3p in the £), while other businesses will experience a slightly higher rate of 0.526 (52.6p in the £). Notably, these multipliers encompass the base figures mandated by the Government, with an additional premium of 0.014 expertly imposed. This premium allocation is dedicated to bolstering essential services such as the Police Service, security measures, and enhancing resilience and contingency planning throughout the City.
For 2023-24 the Welsh Government has frozen the multiplier, resulting in no increases in bills. For the financial year 2023-24 the multiplier is 0.535.
Rate Multiplier for your property is in Scotland
Rate Multiplier for your property in Northern Ireland
By incorporating these revised multipliers, the Government aims to support a diverse business landscape while ensuring the City's safety and well-being remains top priority. Embrace the updated multipliers and seize the opportunities that lie ahead in the thriving business environment of 2023/24!
With each revaluation, all non-domestic properties undergo a reassessment of their rateable values, ensuring that business rates bills remain current and accurately align with prevailing rental values and market fluctuations. The latest revaluation, effective from 1st April 2023, aims to reflect the ever-changing economic landscape more precisely.
The regularity of these revaluations plays a crucial role in maintaining a responsive system that adapts to dynamic economic conditions. By frequently updating rateable values, the business rates framework stays attuned to the shifting trends and developments in the property market.
Additionally, business rate reliefs offer potential relief to ratepayers, granting them the opportunity for a reduction in their business rates bill based on their unique circumstances. These reliefs encompass a diverse range of options, some being permanently available, while others are introduced on a temporary basis by the Government during Budgets.
Commencing on the 4th of January 2023, the novel subsidy control regime in the UK has been set in motion, facilitating public authorities, including devolved administrations and local governing bodies, in granting subsidies that cater to specific local requirements.
Under this new system, public authorities providing subsidies are obligated to adhere to the UK's international subsidy control commitments, ensuring a consistent and uniform approach across the nation. The recently implemented subsidy control legislation establishes a comprehensive framework for this UK-wide subsidy control regime.
For comprehensive details on the GOV of UK subsidy control regime, please visit the designated webpage.
Regarding rating advisers, it's important to note that ratepayers are not obliged to have representation during discussions concerning their rateable value or rates bill. Nevertheless, should a person liable to pay rates wish to search for representation, they need to know that members of both the Institute of Revenues, Rating, and Valuation (IRRV) and the Royal Institution of Chartered Surveyors (RICS) possess the necessary qualifications and adhere to strict rules of professional conduct to safeguard the public from any misconduct.
Prior to engaging a rating adviser or company, it is imperative to verify their expertise and knowledge in the field and ensure they have adequate indemnity insurance. Exercising caution is essential, and if needed, seeking additional advice before entering into any contractual agreement is strongly advised.
We aim to provide a comprehensive guidance to local authorities on administering the 2023 Supporting Small Business Relief for the years 2023/24 to 2025/26 in England. Please note that this guidance is not a replacement for existing legislation.
Enquiries regarding this measure should be directed to: [email protected]
As announced during the 2022 Autumn Statement, the 2023 Supporting Small Business (SSB) scheme has been designed to cap bill increases at £600 per year for businesses that may lose eligibility for some or all of the Small Business UK Rate Relief or Rural Rate Relief during the 2023 revaluation. The chief aim of the SSB scheme, which was initially brought into effect during the 2017 when the revaluation took place, which looks to help ratepayers that continuously face bill increases which go way past the confines set by the Transitional Relief caps which can accredited to the loss of Small Business Rate Relief or Rural Rate Relief.
From 2023/24 to 2025/26, the government will reimburse local authorities that utilize their discretionary relief powers under section 47 of the Local Government Finance Act 1988 (as amended) to grant the 2023 Supporting Small Business relief. It will be the responsibility of individual local authorities, handling the administration of the relief, to adopt a local scheme and determine the cases in which relief will be granted, considering the guidelines provided here.
Central government ensures to give money back to billing authorities and main training authorities for the definite charge suffered in the rates retention scheme for the 2023 Giving support to Small Business respite in unity with the descriptions that have been explained in this guide.
To qualify for the 2023 Supporting Small Business Relief (2023 SSBR), ratepayers must meet the eligibility criteria detailed in section 2 of this guidance. The relief is intended to assist ratepayers whose rateable value changes during the revaluation result in the loss of some or all of their Small Business, Rural Rate Relief, or 2017 SSBR, leading to significant bill increases. It is noteworthy to mention that Aids and Communal Amateur Sports Clubs as they anyway are eligible to compulsory 80% aid are not entitled for the 2023 SSBR.
The aid will set a ceiling for the growth in the invoices of entitled ratepayers to a max amount cash assessment of £600 per year. This ensures that ratepayers are shielded from substantial bill increases in the 2023/24 period after the application of transitional relief and small business rate relief (where applicable). Unlike the old scheme from 2017, the 2023 SSBR shall under no circumstances contain minimum percentage bill surges to make the process simpler and easier.
Furthermore, ratepayers on the 2023 SSBR with 2023 rateable values of £51,000 or higher will not be required to pay the supplement (1.3p) to fund small business rate relief during the time they remain eligible for the 2023 SSBR.
The 2017 Supporting Small Business Relief (SSBR) scheme was introduced to aid small and medium ratepayers who faced significant bill increases during the 2017 revaluation. These ratepayers have been receiving support for a period of six years to help them adjust to their full 2017 bills. As a result, for ratepayers receiving 2017 SSB relief in 2022/23, their eligibility for the 2023 SSBR will cease on 31 March 2024. Local authorities should ensure that this criteria is clearly communicated in the scheme approved by their council, and relief for these ratepayers should be granted for one year only, countenancing the relief to be taken out on 31 March 2024 without any further notice to be given. Details of this change can be found in the comprehensive guidance at section 2. All further ratepayers that are entitled will carry on to be a part of the 2023 SSBR for either three years or till they touch the invoice they would have paid without having utilized the scheme. However, if there is a change of ratepayers, it will not impact their eligibility for the Supporting Small Business scheme, unless the property becomes vacant or occupied by a charity or Community Amateur Sports Club.
The eligibility for the 2023 SSBR scheme does not involve a second property test. Nonetheless, ratepayers who lost entitlement to Small Business Rate Relief during 2022/23 due to the failure of the second property test but were granted a 12-month period of grace under the rules for Small Business Rate Relief will be able to continue benefiting from the 2023 SSBR scheme for the remaining duration of their 12-month grace period.
Detailed guidance regarding eligibility and the value of the Supporting Small Business scheme is available in Section 2.
Properties eligible for charity or Community Amateur Sports Club relief or those that are unoccupied will not qualify for the 2023 SSBR. Additionally, to avoid double counting of relief, small business rate relief or rural rate relief should not be applied to further reduce the bill determined under the 2023 SSBR. For instance, a ratepayer that is entitled for Small Business Rate Relief, whose cost went upward from GBP3,000 (paying nothing in 2022/23) to GBP14,000, would be entitled to the below bill breakdown for 2023/24 before applying the 2023 SSBR:
After applying the 2023 SSBR, the bill for 2023/24 would be reduced to £600. No further Small Business Rate Relief should be applied to the £600 bill.
Similar principles apply to material goods for which a Section 44A certificate would be permitted, concerning to the allotment of rateable prices for relatively working properties. The existence of a Section 44A credential most probably will not diminish the bill which is determined under the 2023 SSBR.
All the additional flexible reliefs, which also include the ones funded by section 31 allows, would be measured post the use of the 2023 SSBR.
The 2023 SSBR is likely to be regarded as a subsidy. As such, any relief provided by Local Authorities under this scheme must comply with the UK's domestic and international subsidy control obligations (Refer to the BEIS guidance for public authorities, which contains information on the new UK subsidy control regime commencing on 4 January 2023).
In cases where a local authority seeks to provide relief falling below the Minimal Financial Assistance (MFA) thresholds, the Subsidy Control Act permits an economic actor (e.g., a holding company and its subsidiaries) to receive up to £315,000 within a three-year period (covering the 2023/24 year and the two preceding financial years). MFA appropriations add up with each other and with various added appropriations which fall under the class of 'Minimal or SPEI financial assistance'. BEIS COVID-19 commerce allowances and any other appropriations that were claimed in the Trivial Sums of Financial Assistance perimeter of the Trade and Cooperation Arrangement would be calculated in the £315,000 grant.
In situations where it becomes evident to the local authority that the ratepayer is on track to exceed the Minimal Financial Assistance (MFA) limit, it is incumbent upon the authority to automatically withhold the relief. This proactive approach ensures that potential oversights are addressed promptly. On the other hand, for scenarios where there is no immediate indication of MFA limit breaches, local authorities may opt to incorporate the relief in the billing process. They can then request ratepayers to undergo a self-assessment, whereby the onus lies with the ratepayer to promptly inform the authority if, at any point, they surpass the MFA limit.
Transparency measures are essential for subsidies that surpass £100,000, where a comprehensive record-keeping system must be upheld. This requirement applies on a per-subsidy-award basis rather than cumulatively per beneficiary. Consequently, for each individual subsidy exceeding £100,000, it becomes obligatory for the local authority to furnish pertinent details of the subsidy within the subsidy control database. In pursuit of efficient subsidy management, the Manage UK Subsidies Portal serves as the designated platform for users to create accounts and oversee subsidy schemes and awards. To gain access to this portal, users can initiate the process by reaching out to [email protected], thus embarking on a streamlined journey to efficiently administer subsidy records in compliance with regulatory norms.
As with any other form of relief, it is vital for local authorities to undertake recalculations of Supporting Small Business Relief (SSBR) when circumstances surrounding a ratepayer's property experience alterations. Such changes may manifest in various ways, including retrospective adjustments to the rateable value or the hereditament. These modifications might occur either during the ongoing fiscal year or at a subsequent point in time.
The regulations outlined under section 47 of the Local Government Finance Act 1988 warrant strict adherence when contemplating the revocation or modification of a rate relief scheme, potentially leading to increased rate bills. In such instances, the prescribed notice period stands at no less than 12 months, allowing affected ratepayers ample time to prepare for forthcoming adjustments. Such revocations or variations, unless essential to adhere to international agreements, can only take effect at the conclusion of a financial year. Nevertheless, within the ambit of these regulations, local authorities retain the discretion to make decisions predicated upon eligibility criteria. In the event that a change in circumstances renders a property ineligible for a particular relief, the local authority is well within its rights to effectuate an amendment to the corresponding bill, ensuring that the recalibration accurately reflects the loss of relief.
Consequently, it becomes incumbent upon local authorities, while bestowing the accolade of SSBR, to enshrine within the conditions of the award the fundamental notion that the relief's continuance is contingent upon the property's sustained eligibility. Proactive foresight of potential changes in property usage underscores the importance of vigilance on the part of both local authorities and ratepayers alike. Should the usage of a property undergo a transformation that renders it ineligible for the SSBR, it becomes imperative that the relevant chargeable amount is recalculated with due diligence, thus accurately reflecting the loss of relief. Moreover, as highlighted earlier, local authorities should meticulously devise an approved scheme that leaves no room for ambiguity. This involves stipulating unequivocally that ratepayers who were previously part of the 2017 SSBR scheme in 2022/23 are eligible for one year of relief only, with the clear intent of facilitating the smooth withdrawal of the relief from these ratepayers by 31 March 2024, ensuring transparency and maintaining the integrity of the relief scheme.
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Eligibility on Day 1 of the Scheme (1st April 2023)
On 1st April 2023, the 2023 SSBR will be applicable to hereditaments meeting the following criteria:
In instances where the chargeable amount for 31st March 2023 was determined under section 47, except through schemes introduced for the Extension of Transitional Relief and Supporting Small Business Relief for lesser(small) and intermediate(medium) properties, the entitlement for the 2023 SSBR must be evaluated as if section 47 were not applicable.
In instances in which the hereditament, either corporeal or incorporeal is itemized in the range of a special authority (e.g., the City of London), the entitlement for the 2023 SSBR shall be constituted as if the exceptional authority's small trade non-domestic grade multiplier was 49.9p for 2022/23 and 49.9p for 2023/24.
Beyond 1st April 2023, the 2023 SSBR will cease to apply under the following circumstances:
Furthermore, in situations where a ratepayer lost entitlement to small business rate relief during 2022/23 because they failed the 2nd property test but were granted a 12-month grace period under the rules for small business rate relief (and consequently remained entitled to small business rate relief on 31st March 2023), their eligibility for the 2023 SSBR will end at the conclusion of that 12-month grace period.
Once hereditaments cease to be entitled to the 2023 Supporting Small Business Relief (2023 SSBR) for a day, they cannot regain eligibility even if their circumstances change at a later date. For instance, if a property becomes unoccupied and later becomes occupied again, it will not requalify for the 2023 SSBR.
With a likening to the transitional relief scheme, where the assessment officer issues a certificate of rateable cost under Regulation 18 of the Non-Domestic Rating (Amounts that can be Charged) (England) Regulations 2022, endorsing the correct rateable value at 1st April 2023 (in cases where they cannot amend the list for 1st April 2023 by rule), the eligibility for the 2023 SSBR and its calculation should be revisited. The revision involves utilizing the value certified under Regulation 18 instead of the value shown in the list for 1st April 2023. This revision should be effective for the days referred to in Regulation 18(4) (the date when the list was altered to correct the inaccuracy and subsequent days) or Regulation 18(5) (where no alteration has been made).
This particular methodology make sure that ratepayers whose 2023 accumulated list rateable standards are amplified by the Valuation Office Agency are eligible on from the date the list is reformed for the Supporting Small Business Relief from that point onwards. By implementing this, such ratepayers are not penalized merely because the increase in their rateable value was not backdated to 1st April 2023. This aligns with the current principle applied in the transitional relief scheme.
When the 2023 SSBR is applicable, the Department for Levelling Up, Housing, and Communities (DLUHC) will fund local authorities to apply a chargeable amount under section 47 of the 1988 Act for the period from 1st April 2023 to 31st March 2026, following the rules outlined in Part 1 to Part 3 of the Non-Domestic Rating (Chargeable Amounts) (England) Regulations 2022, with the following adjustments:
The definition of NCA (Net Chargeable Amount) remains unchanged. However, it's important to note that eligibility for the 2023 Supporting Small Business Relief (2023 SSBR) will end when the chargeable amount for a day, as determined under the 2023 SSBR, equals or exceeds the chargeable amount without the application of the scheme.
Regulation 6, which pertains to special authorities, will continue to apply as usual under the 2023 SSBR. This guarantees that ratepayers in London City would still need to pay any supplementary amount attributable to the City multiplier.
Changes in Rateable Value (Regulation 13)
To be clear and transparent, the guidelines for variations in rateable value which would take effect from after 1st April 2023 (regulation 13) will carry on to apply as usual, with the modifications in subsection 30 mentioned above. This ensures that any subsequent increases in rateable value will be paid in full in the standard manner.
The 2023 SSBR will be applicable to hereditaments that meet the following criteria:
After the day of formation the 2023 SSBR will not apply if the circumstances described previously come around.
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The number of hereditaments eligible for the 2023 SSBR that later undergo splits or mergers is expected to be minimal. Given the complexity of creating specific rules for mergers involving properties outside the 2023 SSBR, the government has decided not to devise detailed rules for prescribing chargeable amounts in various split or merger scenarios.
Instead, for hereditaments meeting the criteria mentioned in previous paragraphs, the Department for Levelling Up, Housing, and Communities (DLUHC) will fund local authorities to apply a chargeable amount under section 47 of the 1988 Act based on the following principle:
For splits that are more straightforward with regard to the hereditaments that were formerly eligible for the SSB, powers that be may opt to apportion the chargeable amount in the SSB scheme for the hereditament in advance to the divide based on the change in rateable value resulting from the split, following the principle specified in the Schedule of Non-Domestic Rating (Chargeable Amounts) (England) Regulations 2022.
For mergers and reorganisations, authorities will need to estimate to what extent the part of the hereditament that was formerly eligible for the SSB should continue to receive support under the SSB scheme, following the principle of the SSB scheme. DLUHC has no expectation from authorities to wish any official apportionments of the rateable cost for this purpose.