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What are business rates?

Business rates are one of the various expenses that you need to be aware of when you start or expand a business.

What are business rates?

Business rates are collected by local authorities and these rates are based on the value of non-residential properties. Although business rates are collected locally, they are used nationally to pay for council run services.

You will usually have to pay business rates if your business is carried out in a non-residential property such as a:

  • shop
  • office
  • pub
  • warehouse
  • factory
  • holiday rental home or guest house.

If you pay business rates they are an allowable expense for tax purposes.

What is business rate relief?

In some circumstances a business may be fully or partly exempt from business rates:

Fully exempt businesses

  • Farm buildings and land (excluding offices)
  • Religious buildings
  • Buildings used for the disabled.

Partly exempt businesses

There are various reasons why business rates may be reduced, the rules for England, Wales, Scotland and Northern Ireland are different, reliefs available include:

  • Small business rate relief
  • Rural rate relief
  • Charitable rate relief
  • Enterprise zones
  • Empty buildings relief
  • Hardship relief
  • Transitional relief

If you think you may be eligible visit one of the following websites to find out more. 

How do I pay business rates?

Business rates are paid to your local council, they relate to the tax year (April to March). The council will issue you a bill in February or March each year and this will include details on how to pay.

You can estimate you business rates bill on the GOV.UK website

Contact your council if you have any questions about your bill.

Do I need to pay business rates if I work from home?

If your business is home based, you may need to pay business rates in addition to council tax. This applies to properties that are part business and part domestic, or if you sell goods or services to people who visit your property, or you employ people to work at your property.

You don’t usually have to pay business rates for home-based businesses if you:

  • use a small part of your home for your business, e.g. you use a bedroom as an office
  • sell goods by post.

You may need to pay business rates as well as Council Tax if:

  • your property is part business and part domestic, e.g. if you live above your shop
  • you sell goods or services to people who visit your property
  • you employ other people to work at your property
  • you’ve made changes to your home for your business, e.g. converted a garage to a hairdresser’s.

The Valuation Office Agency (VOA) will be able to tell you if you should be paying business rates.

They can be contacted by calling:

03000 501 501 (England)
03000 505 505 (Wales)

Or visiting the Scottish Assessors Association’s website (Scotland) 

Coronavirus: does my business still need to pay business rates?

The government is to introduce a business rates retail holiday for the 2020/2021 tax year for businesses in the retail, hospitality and leisure sectors in England.

As explained on GOV.UK: “Businesses that received the retail discount in the 2019-2020 tax year will be re-billed by their local authority as soon as possible.”

  • A £25,000 grant will be provided to retail, hospitality and leisure businesses operating from smaller premises, with a rateable value between £15,000 and £51,000.

In addition, the government has made available additional funding to local authorities to support those that already pay little or no business rates because of small business rate relief [SBBR]. “This will provide a one-off grant of £10,000 to businesses currently eligible for SBRR or rural rate relief, to help meet their ongoing business costs.”

Local authorities will be in touch to advise further.

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