Author Amanda Timcke

Issue November 2009

Pub EADT

Local tax paid by occupiers of non-domestic or business property in England and Wales is under review with new rating valuations anticipated for April 2010.  Here we examine what rates are, and the availability of relief and exemptions.

The rates levied against businesses help to pay for local services and are therefore calculated and collected by the local council.  The actual amount you pay depends upon the rateable value of the property which is determined by the Valuation Office Agency (“VOA”), combined with a centrally set government Multiplier.

Old-style empty property relief was recently withdrawn and this helped to bring some redundant buildings into “life”.  Nevertheless, all empty office properties remain exempt from paying business rates for three months after they become vacant.  Industrial buildings benefit from an exemption for up to six months after they become vacant, and this has led to more inventive and versatile uses of existing stock.

Many charities and amateur community sports clubs now occupy sites for a limited or permanent period of time and apply for charitable relief, however this does not necessarily provide 100% relief. There is also discretionary relief available to non-profit organisations and rural businesses.

Listed buildings and those with a rateable value under £2,200 are exempt from business rates until they become occupied again.  This exemption could lead to the dilapidation of some heritage sites.

Finally, until March 2010, all empty properties with a 2005 rateable value under £15,000 are also exempt.

It is your obligation to let your local council know if the property becomes vacant. If the building has been put to a useful purpose it is only reasonable that a contribution is made to those essential local services.

It is also your obligation to let your local council and VOA know if a property becomes so dilapidated it is beyond use. This has to be independently determined before liability for rates ceases.

To calculate the tax due there is a hypothetical valuation date which creates parity between different types of businesses and properties.  The 2010 valuations will be based on the values as at 1st April 2008.

It is perceived that those prices will be set at the height of the boom at the best possible values available, and will not take into account any realistic changes in property values since the last valuation date.  Whilst the VOA would stipulate that such calculation prevents any unfair influence by high or low points in the property market, there are signs of unrest with property owners and occupiers.

However, if rateable values increase at valuation then the government will reduce the centrally set Multiplier so that the overall national bill will remain the same and the recession will not affect the ultimate price.

Amanda Timcke, Solicitor

Commercial Property Department

Tel: 01284 762331

Published with kind permission of the EADT.

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