The Valuation Office Agency (VOA) has updated the rateable values of all businesses, and other non-domestic, properties in England and Wales from 1 April 2023.
The Government levies a business rates charge on offices, shops, pubs and warehouses; all considered non-domestic properties. The charge may also be applicable where only part of a building is used for non-domestic purposes.
A Government business rates support package has been put in place, worth around £13.6 billion over the next five years, including measures to freeze the business rates multipliers at 49.9p and 51.2p in 2023/24.
This, it is claimed, will see bills six per cent lower than they would have been without the freeze.
Changes to business rates in 2023:
- The multiplier represents the number of pence in each pound of the rateable value that will be payable in business rates before any relief or discounts are applied.
- A transitional relief scheme will cap bill increases caused by changes in rateable values at the 2023 revaluation.
- For the retail, hospitality, and leisure sectors business rates relief will be increased from 50 per cent to 75 per cent (up to £110,000 per business) in 2023/24.
- The increases are capped at £600 per year from April 2023, if businesses lose their eligibility for small business rates relief as a result of the revaluation.
The updated values reflect the property market as of 1 April 2021 and, whilst some sectors benefit, others have been hit hard by the Business Rates Revaluation 2023.
How are business rates calculated?
Business rates are calculated using a property’s ‘rateable value’; the estimated value on the open market. You can look up the rateable value of your property, using HMRCs online tool here.
The rateable value for your property is not what you pay in business rates or rent. Your council uses the rateable value to calculate your business rates bill.
If your rateable value is £51,000 or more, the standard multiplier of 51.2p will be used to calculate how much you need to pay in business rates, whilst if your rateable value is below £51,000, the small business multiplier of 49.9p will be used.
A small business has premises with a rateable value of £48,000.
Their business rates charge is calculated as follows:
£48,000 x 49.9p = £23,952
What is the Small Business Rates Relief?
This applies if the property has a rateable value of less than £15,000, and generally if the business only uses one property:
- Full relief is available on properties with a rateable value of £12,000 or less
- For those between £12,001 and £15,000, relief goes down gradually from 100 per cent to zero per cent
If you’re a small business but you don’t qualify for small business rates relief, your bill will still be worked out using the lower small business multiplier (for properties with a rateable value below £15,000).
Need help with understanding business rates?
With a large proportion of our client base made up of small and medium-sized enterprises, operating across a range of different industry sectors, we understand the challenges of doing business in today’s world.
Businesses should ensure that they are regularly examining their figures, including profit and cash flow forecasts, in order to mitigate the impact of business rates, particularly if revaluation will result in a larger bill.
To speak to us about business rates, or other challenges you’re facing as a business owner, contact us today.