What business rates are usually payable or applicable for office premises?

The vast majority of UK-based businesses that occupy commercial premises are liable to pay business rates. Business rates (also known as non-domestic rates) are levied on commercial properties with the objective of collecting funds towards local services, such as fire protection, police services, and other services funded and provided by the local city council. As such, business rates are collected by the local authorities, which normally issue their annual invoices towards the end of the financial year (March-April).

In order to estimate the cost of your business rates, it is important to understand two key concepts: rateable value and rating multipliers. Business rates are not fixed, but rather they are charged according to a property's rateable value and are calculated using location-specific multipliers. A commercial property's rateable value is equal to the annual rent that would be charged under the current market conditions. Usually, the rateable value of a specific property is determined by an independent professional (valuation officer). Once the value of a commercial property has been determined, its value is multiplied by a location-specific rating multiplier, which is defined by the central government. The resulting figure will be equal to the amount of payable business rates.

Rateable values are updated every five years in order to account for changing market conditions and how they affect property prices. The current rateable values will be in force until 2017. You can find out the rateable value of your business property through the Valuation Office Agency. You can also use public databases to get an estimate on the applicable business rates of a particular commercial property by looking at the average rates charged to similar properties in the same location. This may come in handy if you are looking to relocate to new business premises or to set up an office and wish to budget for your business expenses accurately.

With regards to rating multipliers, it is important to bear in mind that different figures apply to properties in England, Scotland, and Northern Ireland. In 2015, the standard multiplier for commercial properties in England and Wales averaged 48, although different figures apply to small and large properties. An updated list of rating multipliers is available online through the Valuation Office Agency website. Please note that a different multiplier applies to business premises located in the City of London.

In Scotland, rating multipliers are known as poundage rates. Poundage rates are set by the Scottish Executive and are expressed as a proportion of a property's rateable value. Business multipliers are also known as poundage rates in Northern Ireland. You can find location-specific information on the applicable multipliers in this area by visiting the NI Department of Finance and Personnel website.

Business rates discounts

When determining your business rates, it is important to bear in mind that some businesses are eligible to receive discounts, also known as business rates relief. Discounts apply to the following types of businesses:

  • Small Businesses: these may benefit from a business rate relief scheme as long as the business owner has no more than one property and the property's rateable value is under £12,000. Properties whose rateable value is under £6,000 may benefit from a 100 per cent discount on the applicable business rates. For properties whose rateable value ranges between £6,000 and £12,000, discounts are applied on a proportional basis. Small businesses based in London also qualify for reduced business rates, as long as their rateable value is under £18,000 (in London) or under £25,000 (in Greater London). To claim small business rate relief, you must fill in and submit a relief form to your local council.

  • Business premises located in designated Enterprise Zones also qualify for business rates relief. There are currently 24 Enterprise Zones spread across the United Kingdom. You can find a detailed list here to see if your business qualifies. The exact amount of Enterprise Zone relief is determined by the relevant city council, but the maximum discount is set at £275,000 over a period of 5 years.

  • Vacant business premises are also exempt from paying business rates for the first 3 months following the date they become vacant. After 3 months, full business rates are levied.

  • You may also get discounts if your business is a not-for-profit and up to 80 per cent of your business premises are used for charitable work. Contact your local council for details.

Last but not least, it is important that you inform your local council if you relocate to new premises, vacate a commercial property, or think that you would otherwise qualify for reduced business rates. Failing to do so could mean that you could be charged higher rates, in which case you would need to file an appeal and would be required to pay the initial rates until the council produces an amended bill.

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