Your 2024/25 business rates bills will be arriving soon…

It’s that time of year again where councils are busy issuing business rates bills for the 2024/25 rate year. 

There will be a lot of people groaning about the cost of business rates (more than usual) as several factors come into play at once, including a dramatically increased multiplier and reduction in transitional relief.

Multipliers

The rateable value isn’t what you pay. Liability is calculated by applying a multiplier to the rateable value (RV). For the last few years in England, this has been £0.499 for “small properties” with a rateable value under £51,000 RV and £0.512 for those above. The multipliers have been frozen at this level since Covid and whilst the small property multiplier remains at £0.499 for 2024/25, the large property multiplier increases by 6.7% to £0.546. To put that in perspective a company with a rateable value of £100,000 will see an increase in their rates payable from £51,200 to £54,600.

The multiplier in Wales covers all properties and has increased from £0.535 and has been capped by the Welsh Assembly at 5% taking it to £0.562 – significantly higher than England. This disparity and the lack of a “small property” multiplier in Wales is going to cause some consternation.

Transitional Relief

Just to confuse matters, the rateable value x multiplier isn’t always what you pay. Those facing large increases have the impact blunted by transitional relief, which is designed to phase in the impact of substantial changes over time. Those occupiers in transition could see increases of 10, 25 or 40% depending on which band their RV sits in.

Non-Domestic Rating Act 2023

The Act provides the mechanism for the most significant changes in business rates in the last 30+ years although not all the powers have yet been introduced. The first major change is improvement rate relief which comes into effect on 1/4/24 and gives 100% rate relief for a year on qualifying improvements. The improvements must have been completed after 1/4/24, the occupier must have been in occupation for the duration of the works to avoid landlords trying to claim, plus the works needed to be a qualifying type i.e. increase the size of the property or add to P&M. Complete for rating purposes can be very different from practical completion from a building contract perspective and there will be recently completed projects that could be pushed over the line and relief claimed.

Regulatory Compliance

This is a big one. When the government/valuation office (VO) has sorted their IT system out, ratepayers will have to notify the VO of property and rental changes promptly or pay punitive fines, as well as provide an annual confirmation statement to confirm within 60 days of the end of April. Think of it like an annual self-assessment style tax return for your business rates. There are some real intricacies to this – what are the financial implications of divulging information? Will it trigger a VO inspection? You don’t have to divulge past improvements, but if it triggers an inspection then what’s the effective date if the VO find missing areas? How would you divulge a change in an area that the VO aren’t aware of? Lots of questions. No answers. Great.

Cowboys

Lastly a word of warning on unscrupulous rating agents – I was going to use the word specialist but many are anything but. I’ve spoken to several clients about the deluge in emails from companies making some very bold claims. Some almost look like they have been tasked by the VOA or council to contact the occupier to claim a refund -beware!

Our best advice on anything to do with business rates is to get professional advice from a firm that understands this complex subject, ideally ask us, but if you are looking elsewhere then a firm of chartered surveyors who are also members of the Rating Surveyors Association.

Richard Roberts Bsc MRICS 

richard.roberts@rvwcs.co.uk

www.rvws.co.uk

07881 503540