Business Rates

Business Rates Explained

 

Non-domestic rates, or business rates collected by local authorities are the way that those who occupy non-domestic property contribute towards the cost of local services. Under the business rates retention arrangements introduced from 1 April 2013, authorities keep a proportion of the business rates paid locally. The money, together with revenue from council tax payers, locally generated income and grants from central government, is used to pay for the services provided by local authorities in your area. Further information is provided in our Financial Management Information (iow.gov.uk).

Non-Domestic Rates (NNDR) or Business Rates are normally paid by the person or business who occupies the property or who are responsible for an empty business property. You’ll probably have to pay business rates if you use a building or part of a building for non-domestic purposes.

Business rates are charged on most non-domestic properties, like:

  • Shops,
  • offices,
  • pubs,
  • warehouses,
  • factories,
  • holiday rental homes or guest houses.

 

How is NNDR calculated

The following factors will affect your NNDR bill:

The Rateable Value of your property set by the Valuation Office Agency (VOA), an agency of Her Majesty's Revenue and Customs.

The Valuation Office Agency (VOA) compile and maintain a full list of all rateable values. The rateable value of your property is shown on the front of your bill. This broadly represents the yearly rent the property could have been let for on the open market on a particular date specified in legislation.

To estimate a charge for a business property visit  Estimate your business rates - GOV.UK (www.gov.uk)

The Valuation Office Agency may alter the valuation if circumstances change. The ratepayer (and certain others who have an interest in the property) can also check and challenge the valuation shown in the list if they believe it is wrong.

Further information about the grounds on which challenges may be made and the process for doing so can be found at Find and check your business rates valuation - GOV.UK (www.gov.uk)

The National Non-Domestic Rating Multiplier set by Government

The local authority works out the business rates bill for a property by multiplying the rateable value of the property by the appropriate non-domestic multiplier. There are two multipliers: the national non-domestic rating multiplier and the small business non-domestic rating multiplier.

Ratepayers who occupy a property with a rateable value which does not exceed £50,999 (and who are not entitled to certain other mandatory relief[s] or are liable for unoccupied property rates) will have their bills calculated using the lower small business non-domestic rating multiplier, rather than the national non-domestic rating multiplier.

The multiplier for a financial year is based on the previous year’s multiplier adjusted to reflect the Consumer Price Index (CPI) inflation figure for the September prior to the billing year. The current multipliers are shown on the front of your bill.

To estimate you business rates bill and to view the current and previous multipliers please visit: Estimate your business rates - GOV.UK (www.gov.uk)

Revaluations

All non-domestic property rateable values are reassessed at revaluations. they are undertaken by the Valuation Office Agency (VOA) usually every five years. The most recent revaluation took effect from 1 April 2017.

Revaluations ensure that business rates bills are up to date. That they accurately reflect current rental values and relative changes in rents. Frequent revaluations ensure the system continues to be responsive to changing economic conditions.

 Find and check your business rates valuation - GOV.UK (www.gov.uk).

You can also estimate your business rates bill: Estimate your business rates - GOV.UK (www.gov.uk)

Business Rate Reliefs

For information in relation to reliefs available as a result of COVID-19 visit: COVID-19 Business Advice (iow.gov.uk)

Depending on individual circumstances, a ratepayer may be eligible for a reduction to their business rates bill.

There are a range of available. Some of the permanent reliefs are set out below in this table. Temporary reliefs are often introduced by the Government at Budgets.

Further detail on local reliefs are provided in our Business Rates section.

Small Business Rates Relief

If a ratepayer’s sole or main property has a rateable value which does not exceed an amount set out in regulations, the ratepayer may receive a percentage reduction in their rates bill for this property of up to a maximum of 100%. The level of reduction will depend on the rateable value of the property and the number of business properties you or your business have within England.

Generally, this percentage reduction (relief) is only available to ratepayers who occupy either

  • one property, or
  • one main property and other additional properties providing those additional properties each have a rateable value which does not exceed the limit set in regulations.

The aggregate rateable value of all the properties mentioned in (b), must also not exceed an amount set in regulations. For those businesses that take on an additional property which would normally have meant the loss of small business rate relief, they will be allowed to keep that relief for a fixed additional period.

More information is provided at: Local government: Business rates - detailed information - GOV.UK (www.gov.uk)

Certain changes in circumstances may affect your entitlement to a reduction.  Examples of the types of changes which should be notified are:

  • The property falls vacant;
  • the ratepayer taking up occupation of an additional property;
  • an increase in the rateable value of a property occupied by the ratepayer in an area other than the area of the local authority which granted the relief.

To notify us email business.rates@iow.gov.uk

Unoccupied Property Rate Relief

Business rates are generally payable in respect of unoccupied non-domestic property. However, they are generally not payable for the first three months that a property is empty. This is extended to six months in the case of certain other properties. For example industrial premises or listed buildings.

More information is available at: Business Rates (iow.gov.uk)

Partly Occupied Property Relief

A ratepayer is liable for the full non-domestic rate whether a property is wholly occupied or only partly occupied.

Where a property is partly occupied for a short time, in some cases the partly occupied property relief may be available. Please note: this will only apply to the part of the property that is unoccupied.

More information is available at: Business Rates (iow.gov.uk)

 

Charity and Community Amateur Sports Club Relief

Charities and registered Community Amateur Sports Clubs are entitled to 80% relief where the property is occupied by the charity or the club. The property must be wholly or mainly used for the charitable purposes of the charity or other charities. It must also be only used for the purposes of the club, or other clubs.

The local authority has discretion to give further relief on the remaining bill.

Full details can be found in our Business Rates Reductions section (iow.gov.uk).

Transitional Rate Relief

At a revaluation, some ratepayers will see reductions or no change in their bill whereas some ratepayers will see increases.

Transitional relief schemes are introduced at each revaluation to help those facing increases.

This relief has been funded by limiting the reduction in bills for those who have benefitted from the revaluation. Transitional relief is applied automatically to bills.

Further information about transitional arrangements can be found at Business rates relief - GOV.UK (www.gov.uk)

 Retail Discount

The Government announced in the Budget on 29 October 2018 that it would provide a Business Rates Retail Discount. This discount was to apply in the years 2019/20 and 2020/21.

The relief will apply to occupied retail properties with a rateable value of less than £51,000 in the year 2020/21.

This includes businesses such as:

  • Shops;
  • restaurants;
  • café;
  • bar
  • pub;
  • cinema;
  • music venue;
  • hospitality;
  • leisure businesses, gyms, spas, casino or hotel.

The amount of relief awarded differs depending on the financial year since the relief became available.

  • 2019 financial year 33%.
  • 2020 financial year 100%.
  • 2021 100% for the first 6 months (1 April 2021 to 30 June 2021). Then 66% for the remainder of the year (01 July 2021 to 31 March 2022).

For the 2021 financial year the amount of relief is capped at £2 million per business.

Then further capped to £105,000 for properties where the type of business at the address was not legally required to close due to government restrictions as a result of COVID-19 announced from 5 January 2021.

More information is available at Business Rates (iow.gov.uk)

 Local Discounts

The local authority has discretion to grant discretionary local discounts. They can also give hardship relief in specific circumstances.

Full details and application forms can be found at Business Rates (iow.gov.uk)

Subsidy Allowance.
Previously known as State Aid

The EU State aid rules no longer apply to subsidies granted in the UK. This is following the end of the transition period on 31 December 2020.

This does not impact the limited circumstances in which State aid rules still apply under the Withdrawal Agreement, specifically Article 10 of the Northern Ireland Protocol.

The United Kingdom remains bound by its international commitments, including subsidy obligations set out in the Trade and Cooperation Agreement (TCA) with the EU.

This scheme is covered by 3 subsidy allowances:

  • Small Amounts of Financial Assistance Allowance – you’re allowed up to £335,000 (subject to exchange rates) over any period of 3 years.
  • COVID-19 Business Grant Allowance – you’re allowed up to £1,600,000.
  • COVID-19 Business Grant Special Allowance - if you have reached your limits under the Small Amounts of Financial Assistance Allowance and COVID-19 Business Grant Allowance, you may be able to access a further allowance of funding under these scheme rules of up to £9,000,000, provided certain conditions are met.

Grants under these three allowances can be combined for a potential total allowance of up to £10,935,000. This will be subject to exchange rates.

 

Rate Relief for Businesses in Rural Areas

Certain types of properties in a rural settlement with a population below 3,000 may be entitled to a discount. 

The property must be:

  • The only general store;
  • the only post office;
  • or a food shop.

These type of properties must have a rateable value of less than £8,500.

or

  • The only public house; 
  • the only petrol station.

These type of properties must have a rateable value of less than £12,500. 

The property has to be occupied. 

An eligible ratepayer is entitled to relief of the full charge. The local authority has discretion to give further relief on the remaining bill.

Full details can be obtained from the Isle of Wight Council Business Rates department by emailing business.rates@iow.gov.uk

 

 

How to pay your NNDR

Payment of business rate bills is automatically set on a 10-monthly cycle.

However, the Government has put in place regulations that allow businesses to require their local authority to enable payments to be made through 12 monthly instalments.

If you wish to pay in 12 monthly instalments please complete our online Business Rates 12 Monthly Instalments Form (iow.gov.uk).

Any enquires please email: Business.rates@iow.gov.uk

 

Further information for Business rate payers

Rating advisers

Ratepayers do not have to be represented in discussions about their rateable value or their rates bill.  However, ratepayers who do wish to be represented should be aware that members of the:

  • Royal Institution of Chartered Surveyors (RICS - website www.rics.org
  • Institute of Revenues, Rating and Valuation (IRRV - website www.irrv.org.uk)

Are qualified and are regulated by rules of professional conduct designed to protect the public from misconduct.

Before you employ a rating adviser, you should check that they have the necessary knowledge and expertise, as well as appropriate indemnity insurance. Take great care and, if necessary, seek further advice before entering into any contract.

Information Supplied with Demand Notices

Information relating to the relevant and previous financial years in regard to the gross expenditure of the local authority is available in our Financial Management section (iow.gov.uk)

You can request a hard copy of the Council Tax Leaflet 2020/21, which includes the financial management information by writing to the council or telephoning 01983 823920.

Waste Collection

All businesses including those operating from home, have a legal responsibility to safely contain and dispose of any waste produced as a result of their business. All businesses have a duty to organise and pay for regular waste collections. This legal responsibility also extends to holiday let properties. These are classified as commercial waste producers under the Controlled Waste Regulations (2012). This definition applies regardless of whether the premises are liable for business rates or council tax. for more information you should contact the Council's Commercial waste services: Business and Commercial Waste and Recycling Services (iow.gov.uk).

Change in Circumstances

You must inform us when:

  • You move or make changes to your premises.
  • The nature of your business changes.

You must report any changes to us. This is to make sure you are paying the right amount and don’t get a backdated increase in your bill.

If your property is available for short-term holiday let for 140 days or more a year, it may be rated as a self-catering property and is liable for Business Rates.

You will need to complete our online Business rates application form . the form must be completed before a request can be made to the Valuation Office Agency to assess your property within Business Rates.

If your property is due for a refit or refurbishment, please contact us prior to the work so that an inspection can be carried out. You can inform us about these changes by using the online 'Send a Message to this Service' form.

If your property becomes empty please contact us immediately. Exemptions will not be granted retrospectively. You can inform us about these changes by using the online 'Send a Message to this Service' form.
 

Moving Premises or Change of Address

You need to inform us when:

  • You move into a new business premises.
  • You move out of a business premises.
  • Any other change in circumstances.

This is to make sure we are billing you for the correct amount of Business Rates.

We will need the following information from you:

  • The new address of the business; 
  • the date you purchased or leased the property;
  • the date you are moving into the property;
  • the name and address of your landlord if you are leasing the property;
  • the name of the business and to whom the bill should be addressed.

You can inform us about these changes by completing our online 'Report a Change of Address' form.

Working from Home

If you work at or from home, you should be aware that the accommodation within your home. For example an office or workshop may be liable to business rates. Whilst the remainder of the property will continue to be liable to council tax. Although an alteration may be made to its banding.

There are many considerations that must be made in deciding whether a room in a house is to be used as an office or workshop. The Valuation Office Agency (VOA) will consider the effect of the extent and frequency of the non-domestic use of the room. They will also consider any modifications made to the property to accommodate that use. Each case is considered on its own merits. Normally a member of staff from the Valuation Office Agency will visit the property. They will check the facts before an assessment is made for non-domestic rates.