Annual business rates liability is calculated by multiplying a property’s rateable value (RV), as set in 2000, by the rate in the pound. The rate poundages for the coming financial year have been set at £0.43 for England, £0.42 for Wales and £0.47 (or £0.46 for RVs below £10,000) for Scotland.
The government has introduced transitional phasing for the 2000 Revaluation, which caps excessive increases or decreases year-on-year by set percentages plus inflation. The table below summarises the figures for the 2001/02 financial year. The local authority applies these figures to the rates bills but the ratepayer is advised to double-check the calculations.
There are a number of ways to lessen the rates burden, depending on the property portfolio. Up to 100% savings can be gained on surplus accommodation. Companies can request a different assessment of unused areas or apply for discretionary relief. In some cases, it is vital to inform the local council prior to the start of the next financial year to maximise the benefit.
Qualification for relief will depend on where the vacant area is in relation to the retained area, how it is segregated and how long it has been unused.
Only properties used for manufacturing or storage will attract 100% relief while vacant. Most other property types will be granted 50% relief, after an initial three-month period at 100%.
As the granting of relief can be discretionary, a rating specialist’s advice can improve the strength of your case. This is important to consider because, once the decision is made, there is no right of appeal.
For example, a factory in Eastleigh was due to close for redevelopment after moving to a new site and sought advice on its business rates liability. Manipulation of the rates payable on the gradual vacation of the old site and occupation of the new site saved an estimated £200,000.
It is important to check the feasibility of an appeal by comparing possible savings with the costs of clearing designated areas.
The engineering industry may be affected by proposals for local authorities to ‘top up’ the nationally set rate in the pound by up to 5%. In a survey backed by Fuller Peiser late last year, 93% of respondents opposed such a change. Companies should look out for further developments and assess the impact such a move could have on their businesses.