Business Rates may soon increase hitting business valuations

There are many businesses who will be looking to the future with relief that they have survived the recession however they may, in the next financial year, have to face paying higher business rates.

Business rates are revalued every 5 years and business pay a multiplier of the rateable value of the property. So for the last 4 years a business has been paying tax based on 2005 commerical property rental values.

But these rates in April 2010 will be revalued and will be based on rents in April 2008, right at the peak of the market, before the bubble burst. So businesses will be paying higher rates regardless of whether the multiplier changes.

Also if the small business threshold does not change for many businesses they may go over the £10,000 rent relief threshold.

So what can a business do?

If they are close to the end of their lease they can look for other premises, ones that may be better located or more suitable give knowledge of their business activity. Premises that may result in higher turnover, but may have lower rents due to the landlord being more reasonable - letting at 2010 rates.

They can ensure that they are actually claiming full rates relief entitlement and halve their rates payable. There are loads of small businesses who STILL do not do this. Alternatively, if they are an essential business in a village (Pub, Post Office) they can apply for full rates relief.

They might consider appealing against the rates valuation. To do this they will need to compare their ratable value against others in the area this needs and note whether they are in the right valuation scheme. I.e you may be valued assuming the business has A3 use, but it may no longer be applicable.

If a business does none of these they may have to face the fact that their profits and the technical value of their business will fall.

This entry was posted on 02/10/2009 at 01:20 pm and is filed under The Economy, General. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response or trackback from your own site.