What you need to know about business rates

Written by: Richard Farr | Published:

In what has been billed as the biggest change in a generation, the process of the 2017 business rates revaluation is well under way. Richard Farr, partner at national property consultancy Sanderson Weatherall, explains how the waste and recycling sector is likely to be impacted by the upcoming reforms.

Business rates are a tax payable on non-domestic buildings, set by the government and collected by the relevant local council. Similar to council tax for domestic properties, they serve as a contribution towards local services.

In England and Wales, business rates are calculated according to a property’s ‘rateable value’, which in the waste and recycling sector is based on the annual expected income of a facility at the time of the last valuation date (currently

1 April 2008). This figure is then multiplied by the annual business rates multiplier which is set by the government, to give the total amount payable before any deductions.

Business rates are also calculated for plant and machinery, which will also have a significant effect on many waste and recycling companies of course.

What changes are under way?

On 1 April 2017, new rateable values for properties around the country will be implemented. This has triggered a lengthy process, including a number of key dates throughout 2016 and 2017.

Draft rateable values were published online by the VOA (Valuation Office Agency) on 30 September, which help companies to understand their new valuation, while providing an opportunity for them to tell the VOA about any errors before the new rates are applied from April.

For the first time, this information has only been made available online via the VOA website, and they won’t be sending out printed valuations. To get access, you need to register your details with the VOA. April 2017 will also see the introduction of a new appeals process called ‘check, challenge, appeal’, which will change the way in which organisations can appeal their rates.

How will it impact the sector?

Most businesses are likely to experience a change in their business rates as a result of the revaluation. This is because the valuation date is set two years before the last revaluation and since there has not been a revaluation since 1 April 2010, local authorities in England and Wales are still basing their business rates bills on 2008 figures. This will change next year, as all non-domestic properties in England and Wales will be reassessed based on a valuation date of 1 April 2015.

For waste and recycling facilities, the situation will be largely neutral. On the whole, royalties have done nothing due to the counter effect of the landfill tax and build costs are up so plant and machinery will go up a little.

However, these assessments should be checked annually because they are subject to annual review. One other point to bear in mind is that regional variations may occur. In some areas of the UK, rents have not recovered to their pre-recession levels and as a result some businesses will most likely enjoy newer, much lower rateable values.

However, where rents have increased since the last valuation, businesses must be prepared that their rateable values will be likely to increase accordingly.

Wherever they are in the UK, businesses should seek the help of a qualified rating surveyor who can ensure they are on the correct rateable value and advise on any business rate relief they might be entitled to.

What happens next?

Although the draft rateable values have now been published, waste and recycling facilities will not be able to calculate their new business rates until the government announces the multiplier in January.

The next key date in the calendar is 18 October 2016, when the retail price index is announced as this affects what businesses pay in business rates. Following that, the new rating list will be published on 1 April 2017, with businesses able to lodge appeals at that point.

The important thing is to seek advice from a qualified rating advisor as soon as possible to make sure you are not paying over the odds. They can assess your draft rateable values and analyse whether you are entitled to a reduction in your business rates.

To find out more about the 2017 business rates revaluation visit www.sw.co.uk/businessrates

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