Introduction

What are business rates?
How are business rates calculated?
What is the rateable value?
Revaluation of properties
Appeals against the rateable value of a property
Transitional arrangements
Exemptions
Rating advisors
Further information

What are business rates?

Business rates, sometimes called non-domestic rates, are collected by local councils.

These rates are the way in which local businesses, and others who occupy non-domestic property, contribute towards the cost of local services.

The money collected is used to pay for the services provided by your local council.

How are business rates calculated?

Apart from properties that are exempt from business rates, each non-domestic property has a ‘rateable value’, which is normally set by valuation officers at the valuation office agency (VOA), an agency of the inland revenue.

The annual charge for business rates is calculated by multiplying the ‘rateable value’ by a ‘non-domestic rating multiplier’, which is set by central government (unless the property is subject to a rate limit imposed by transitional arrangement).

Where the liability is for less than a year, the annual charge is divided by 365 days to find the daily rate (366 in a leap year), which is then multiplied by the number of days liability.

What is the ‘rateable value’?

The rateable value is a professional estimate of the annual rent for a property if it was available on the open market. The valuation officers at the Valuation Office Agency (VOA), an agency of the Inland Revenue, normally set this value.

The current rateable values for all properties are based on April 2003 property prices and can be accessed in the 2005 Rating List which covers the period 1 April 2005 to 31 March 2010.

Paying your business rates by direct debit or standing order

If you would like to start paying your business rates using one of these methods, please contact the rates office and ask us to send you a direct debit instruction or standing order form.

Revaluation of properties

A revaluation can result in you paying much more (or less) than your previous bill. However, any large increases or reductions in charges are phased in gradually.

All non-domestic property is re-valued every five years.

However, the valuation officer may alter the value if he or she believes that the circumstances of the property have changed.

Appeals against the rateable value of a property

You can appeal against the valuation officer’s estimate of the rateable value of a property, if you believe it is wrong.

You can get further information on the grounds for making an appeal, and on how to make one, on the VOA website .

The effect of successful appeals against valuations will normally be backdated to the beginning of the financial year in which they are made, although there are exceptions to this.

Transitional arrangements

Property values normally change a good deal between each revaluation. Transitional arrangements help to phase in the effects of these changes by limiting the amount by which a bill may rise, or fall, following a revaluation.

Exemptions from business rates (1) - unoccupied property rating

1. In general, there will be no business rates to pay for the first three months that a property is empty. After that, an empty property rate of 50% of the bill that would have been due on the occupied property will be payable.
2. Industrial buildings, listed buildings and small properties with rateable values of less than £2200, pay no empty property rates even after the first three months have expired.

Exemptions from business rates (2) - small business rate relief

This is available at 50% for ratepayers occupying single properties with a rateable value up to £5,000, with relief declining in percentage terms on a sliding scale until it is 0% at £10,000.

The relief is only available to ratepayers with either:-

(a) one property, or

(b) one main property and other additional properties providing those additional properties have rateable values less than £2,200.

The rateable value of the property mentioned in (a), or the aggregate rateable value of all properties mentioned in (b), must be under £15,000 outside London or £21,500 within London.

The scheme is funded through a supplement on the rate bills of those businesses not eligible for the relief. The supplement is built into the standard non-domestic rating multiplier. However, ratepayers of eligible business properties with rateable value between £10,000 and £15,000 (£21,500 within London) do not have to contribute towards the relief and will have their bills calculated using the lower small business non-domestic rating multiplier.

Ratepayers must apply for the relief each year and must be eligible on the 1st April of each year. If a ratepayer ceases to be eligible on a day during the year in question, the relief will cease on that day. An application for relief must be submitted in writing to the local authority within 6 months of the end of the financial year to which it relates.

Full details on how to apply for this relief are available from the local authority.

Exemptions from business rates (3) - non-profit making bodies

1. Charities are entitled to relief from rates on any non-domestic property that is wholly or mainly used for charitable purposes.
2. Registered community amateur sports clubs CASCs are also entitled to relief from rates on any non-domestic property that is wholly or mainly used for the purposes of that club.
3. In both the above cases, relief is given at 80% of the bill. The council has discretion to give further relief on the remaining bill.
4. The council also has discretion to give relief on all or part of any rates bill for property occupied by certain non-profit making bodies. We can also consider giving rate relief in cases of hardship, or where part of a property is beyond use for a certain period.

Exemptions from business rates (4) - rate relief for new, non-agricultural business on previously agricultural land or buildings

Rate relief is available for businesses with rateable values of up to £7000, where the business is set up on previously agricultural land or buildings.
Subject to certain conditions, the business will get a 50% reduction in the rates bill for up to five years. The council has discretion to give further relief on the remaining bill on such properties.

Rating advisers

Ratepayers do not have to be represented in discussions about their rateable value or their rates bill. Appeals against rateable values can be made free of charge.

However, if you do wish to be represented, members of the Royal Institute of Chartered Surveyors (RICS) and the Institute of Revenues Raring and Valuation (IRRV) are qualified and regulated by rules of professional conduct designed to protect the public from misconduct.

Before you employ a rating adviser, you should check that they have the necessary knowledge and expertise, as well as appropriate indemnity insurance. If necessary, seek further advice before entering into any contract.

Further information

London Borough of Tower Hamlets
Revenues Services
Town Hall
Mulberry Place
5 Clove Crescent
London E14 2B

Tel: 020 7364 5010
Fax: 020 7364 4456
Minicom: 020 7364 4791
E-mail: businessrates@towerhamlets.gov.uk

More information about business rates is available at www.businesslink.gov.uk, along with other details about starting and running a business.

Pid No: 54, 55

Home Business matters Business rates Introduction Contact rates office Pay rates online Jump to:	Introduction What are business rates? How are business rates calculated? What is the rateable value? Revaluation of properties Appeals against the rateable value of a property Transitional arrangements Exemptions Rating advisors Further information What are business rates? Business rates, sometimes called non-domestic rates, are collected by local councils. These rates are the way in which local businesses, and others who occupy non-domestic property, contribute towards the cost of local services. The money collected is used to pay for the services provided by your local council. How are business rates calculated? Apart from properties that are exempt from business rates, each non-domestic property has a ‘rateable value’, which is normally set by valuation officers at the valuation office agency (VOA), an agency of the inland revenue. The annual charge for business rates is calculated by multiplying the ‘rateable value’ by a ‘non-domestic rating multiplier’, which is set by central government (unless the property is subject to a rate limit imposed by transitional arrangement). Where the liability is for less than a year, the annual charge is divided by 365 days to find the daily rate (366 in a leap year), which is then multiplied by the number of days liability. What is the ‘rateable value’? The rateable value is a professional estimate of the annual rent for a property if it was available on the open market. The valuation officers at the Valuation Office Agency (VOA), an agency of the Inland Revenue, normally set this value. The current rateable values for all properties are based on April 2003 property prices and can be accessed in the 2005 Rating List which covers the period 1 April 2005 to 31 March 2010. Paying your business rates by direct debit or standing order If you would like to start paying your business rates using one of these methods, please contact the rates office and ask us to send you a direct debit instruction or standing order form. Revaluation of properties A revaluation can result in you paying much more (or less) than your previous bill. However, any large increases or reductions in charges are phased in gradually. All non-domestic property is re-valued every five years. However, the valuation officer may alter the value if he or she believes that the circumstances of the property have changed. Appeals against the rateable value of a property You can appeal against the valuation officer’s estimate of the rateable value of a property, if you believe it is wrong. You can get further information on the grounds for making an appeal, and on how to make one, on the VOA website . The effect of successful appeals against valuations will normally be backdated to the beginning of the financial year in which they are made, although there are exceptions to this. Transitional arrangements Property values normally change a good deal between each revaluation. Transitional arrangements help to phase in the effects of these changes by limiting the amount by which a bill may rise, or fall, following a revaluation. Exemptions from business rates (1) - unoccupied property rating 1. In general, there will be no business rates to pay for the first three months that a property is empty. After that, an empty property rate of 50% of the bill that would have been due on the occupied property will be payable. 2. Industrial buildings, listed buildings and small properties with rateable values of less than £2200, pay no empty property rates even after the first three months have expired. Exemptions from business rates (2) - small business rate relief This is available at 50% for ratepayers occupying single properties with a rateable value up to £5,000, with relief declining in percentage terms on a sliding scale until it is 0% at £10,000. The relief is only available to ratepayers with either:- (a) one property, or (b) one main property and other additional properties providing those additional properties have rateable values less than £2,200. The rateable value of the property mentioned in (a), or the aggregate rateable value of all properties mentioned in (b), must be under £15,000 outside London or £21,500 within London. The scheme is funded through a supplement on the rate bills of those businesses not eligible for the relief. The supplement is built into the standard non-domestic rating multiplier. However, ratepayers of eligible business properties with rateable value between £10,000 and £15,000 (£21,500 within London) do not have to contribute towards the relief and will have their bills calculated using the lower small business non-domestic rating multiplier. Ratepayers must apply for the relief each year and must be eligible on the 1st April of each year. If a ratepayer ceases to be eligible on a day during the year in question, the relief will cease on that day. An application for relief must be submitted in writing to the local authority within 6 months of the end of the financial year to which it relates. Full details on how to apply for this relief are available from the local authority. Exemptions from business rates (3) - non-profit making bodies 1. Charities are entitled to relief from rates on any non-domestic property that is wholly or mainly used for charitable purposes. 2. Registered community amateur sports clubs CASCs are also entitled to relief from rates on any non-domestic property that is wholly or mainly used for the purposes of that club. 3. In both the above cases, relief is given at 80% of the bill. The council has discretion to give further relief on the remaining bill. 4. The council also has discretion to give relief on all or part of any rates bill for property occupied by certain non-profit making bodies. We can also consider giving rate relief in cases of hardship, or where part of a property is beyond use for a certain period. Exemptions from business rates (4) - rate relief for new, non-agricultural business on previously agricultural land or buildings Rate relief is available for businesses with rateable values of up to £7000, where the business is set up on previously agricultural land or buildings. Subject to certain conditions, the business will get a 50% reduction in the rates bill for up to five years. The council has discretion to give further relief on the remaining bill on such properties. Rating advisers Ratepayers do not have to be represented in discussions about their rateable value or their rates bill. Appeals against rateable values can be made free of charge. However, if you do wish to be represented, members of the Royal Institute of Chartered Surveyors (RICS) and the Institute of Revenues Raring and Valuation (IRRV) are qualified and regulated by rules of professional conduct designed to protect the public from misconduct. Before you employ a rating adviser, you should check that they have the necessary knowledge and expertise, as well as appropriate indemnity insurance. If necessary, seek further advice before entering into any contract. Further information London Borough of Tower Hamlets Revenues Services Town Hall Mulberry Place 5 Clove Crescent London E14 2B Tel: 020 7364 5010 Fax: 020 7364 4456 Minicom: 020 7364 4791 E-mail: businessrates@towerhamlets.gov.uk More information about business rates is available at www.businesslink.gov.uk, along with other details about starting and running a business. Pid No: 54, 55	Search the site Search Enter a keyword for the service or information you require View A - Z of services See also The following links contain information relevant to this section Related services Related forms Related maps Site index Online guide to business funding Jobs in Tower Hamlets Council
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