What Business Rates are Usually Payable for Office Premises?
Business rates are a type of tax that applies to non-residential premises in the United Kingdom, including shops, warehouses, offices, and factories. They were introduced in the late 1980s and are sometimes called non-domestic rates.
How to Calculate Payable Business Rates in the UK
The specific amount is not uniform, instead calculated on the basis of a property's rateable value, which is updated every few years (usually every five years). Business rate amounts are set and collected by the city council where a commercial property is located. Bills are issued once a year, usually during the first three months of the year, and they're paid one year in advance.
A property's rateable value is assessed by the Valuation Office Agency. You can find the value that applies to your office using the agency's website.
In general terms, the rateable value takes into account the total annual rent that would be charged for the property - factors such as location, size, ownership type (freehold or leasehold) - and the price of similar properties in the local market. Therefore, if your office has above-average features or better amenities than other offices in the surrounding area, the rateable value will be higher, and so will be the applicable business rates. To check the most up-to-date factors taken into account by the Valuation Office Agency when assessing office amenities, click here.
Calculating the Business Rates Applicable to Your Office
Business rates are calculated by taking the office's rateable value and multiplying it by a rating multiplier, which is determined by the UK's central government for properties in England and the National Assembly of Wales in Wales. The rating multiplier is updated on an annual basis. Office properties in Scotland and Northern Ireland are billed taking into account poundage rates instead of a rating multiplier. Like multipliers, poundage rates are reviewed every year, and are usually in line with inflation rates. You can check the applicable poundage rates for Scotland here. Rates for Northern Ireland are available here.
Note that there are two types of rating multipliers: one is the standard, whilst the other is applied to small businesses and is lower by a few pennies. Small business rating multipliers apply to properties whose rateable value is under a certain amount. Contact your city council to find out the current threshold.
Business Rates Exemptions and Relief Schemes
There are some exemptions to the payment of business rates, but these usually don't apply to offices. You can check the list of exemption criteria here. Business rate relief schemes apply in the following situations:
- Offices with a low rateable value. Check this website for updated values. Discounts are applied on a sliding scale from 25% to 100%.
- If you run your business from more than one property. The exact relief amount varies, so it's best to get accurate estimates from your city council.
Moreover, you can qualify for business rates relief if your office is located in an Enterprise Zone. The discounts are calculated over a period of five years, up to a maximum amount which is determined by the city council with jurisdiction over that area. For an up-to-date list of Enterprise Zones, visit this website.
Other relief schemes apply to offices or commercial properties located in rural areas with a low population. The same applies if you use your office either wholly or partially for charitable work, in which case rates are typically reduced by 80%.
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