What are Business Rates?
Every property that is used (or partly used) for commercial purposes will be required to pay Business Rates, also known as Non-Domestic Rates. This form of tax is charged on properties such as offices, dental surgeries, shops, pubs, warehouses and factories.
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How are Business Rates calculated?
Business rates are calculated by HMRC’s Valuation Office Agency (VOA) using the following formula:
Rateable Value X Multiplier = Business Rates
Rateable Value
Firstly the VOA will set a Rateable Value (RV) for your property. This is determined by estimating the property’s value on the open market at a given date.
E.g. A property valuation date was last set on 1st April 2017. A revaluation usually happens every 5 years.
Rateable Value
Next, your RV is then multiplied by a ratio set by the Government, known as the Multiplier. The Government sets two Multipliers; one for small businesses (RV below £51,000) and one for other businesses (RV of £51,000 and above).
Once you know your RV, select which Multiplier is relevant to you and you can calculate your Business Rates.
RV x Small Business Multiplier = Your Estimated Business Rates
Or
RV x Standard Business Multiplier = Your Estimated Business Rates
Business Rate Relief
But we are not finished yet. Your business may be entitled to certain business rate relief such as Small Business Rate Relief, Transitional Relief, Rural Rate Relief, etc. If you qualify for any of these you will need to deduct them from your business rates estimate.
RV x Multiplier – Relief = Business Rates
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