Business rates and your limited company

While council tax is charged on residential properties, the vast majority of non-residential properties have a non-domestic equivalent levied on them.

This tax is what is known as “business rates”, and while the central government in Westminster has some influence over the rates, the system is administrated by your local authority.

If you use part of a building or a whole building for a purpose other than to live in it, it’s quite likely that you’ll have to pay business rates. A non-exhaustive list of the types of properties liable to pay business rates includes offices, shops, warehouses, pubs and more.

The tax is also levied on holiday homes, so if you rent a property out you’ll still have to pay, even though it’s being used domestically by your guests. Farm buildings are not included, and neither are buildings which are used to help people with disabilities.

The key time for business rates is around February or March, when the bill gets sent to you following a lengthy calculation process on the part of the local authority. The bill will cover the following tax year, so be prepared to pay ahead.

[Please click here for important changes to Business Rates due to the COVID-19 crisis]

How are business rates calculated?

In England and Wales, there’s a specific process followed by the government when it comes to working out your business rates.

Each property – no matter what its function or location – has what is known as a “rateable value”. This is calculated by taking its rental value on the open market on 1st April 2015: an estimate for this is calculated by a government body known as the Valuation Office Agency (VOA).

valuation office agency

To find a rough estimate of what your business rates for the year are expected to be, you can take the rateable value and then find out the correct “multiplier”.

The multiplier is an amount set by the central government in Westminster, rather than the local authority, and is what gives you the closest possible estimate to your business rates bill.

There are a couple of possible hitches which may arise while you’re going through the business rates calculation process.

Firstly, you might get asked by the Valuation Office Agency to provide some extra information about the property your business operates from if they need more knowledge before working out its rateable value.

It can sometimes take a while to get all of this information together, so if you’re concerned that you’ll run out of time, simply get in touch with the Valuation Office Agency to request more time.

It’s also possible that, once your rates have been calculated, you’ll come to the conclusion that there’s been an error in the calculation process. If you think this may have happened to you, get in touch with your local authority to find out how to ask for your property’s rateable value to be re-assessed.

Find out your business rates valuation

Find out what the rateable value of your business premises is here. 

This is a sample output of our office space in London. You can find the rateble value of any address in the UK using the search tool.

Business Rate Valuation

As the rateable value is low, it qualifies for rate relief aimed specifically at smaller companies, as detailed below.

What is the small business rate relief scheme?

Certain types of business are eligible for tax relief on their business rates, and it’s a good idea to find this out so that you can take full advantage of any discounts you may be able to secure.

If you’re a small business, you’re likely to be able to claim what is known as “small business rate relief”. The rules differ slightly in each of the United Kingdom’s constituent countries, so it’s a good idea to check with an accountant or adviser if you’re based outside of England.

In England, small businesses can claim this if their property’s rateable value (see above for a definition of this) is under the £15,000 threshold.

If your property’s overall rateable value is under £12,000, you’ll be completely exempt from paying business rates. If it’s between £12,001 and £15,000, as the exact figure goes up the relief will go down in proportion from 100% to 0%.

Your business also may need to only be using one property in order to qualify for relief, but if you are using more than one, you may still be eligible.

In this case, you’ll be able to get relief on your main property provided that the total rateable value of every property associated with your business is below £20,000 (or £28,000 if your properties are in London), and also that none of your business’ other properties have a rateable value above £2,899. You’ll also continue to receive relief on your main property for a year.

Tax-efficient protection for directors

  • limited company life cover