When do you think business rates will go back up?
Discussion
Because I am a small business I get a 50% reduction, although that is and has been for a few years now (because of the recession) actually 100%. I'm surprised it's been held at that for so long, but when it ends I think it will be tough for me and I'll have to have a re-think over my business unit.
Just wondered what your thoughts (if any!) were on when they may go back to normal, are there any trends in the past to compare with?
Just wondered what your thoughts (if any!) were on when they may go back to normal, are there any trends in the past to compare with?
I don't think anything will change for small businesses during the current rating list, i.e. until April 2017. It makes a big difference to many small firms and is a good vote winner too.
I think the incentives/ allowances will come under review over the next 12 months as the results of the revaluation by the VOA come to light and the government can see how they need to deal with the adjusted Rateable Values.
I believe the big shock will come when ratepayers believe that if their RV comes down their rates bill will also come down by the same amount. Business Rates are a good earner for the Treasury and they will need to ensure that the amount of tax take from rates will be maintained, therefore if RVs come down then multipliers may have to increase.
I think the incentives/ allowances will come under review over the next 12 months as the results of the revaluation by the VOA come to light and the government can see how they need to deal with the adjusted Rateable Values.
I believe the big shock will come when ratepayers believe that if their RV comes down their rates bill will also come down by the same amount. Business Rates are a good earner for the Treasury and they will need to ensure that the amount of tax take from rates will be maintained, therefore if RVs come down then multipliers may have to increase.
My guess is that the current system will continue for ever. Even without the discount individual ratepayers in small units contributed very little to the overall business rate take. If I had the time and inclination I could find the details but it is a small figure to collect, and the collection costs are proportionally high.
So I suspect that the limit will merely be adjusted along the lines of the total RV change although its suspected the total RV might go down in which case the limits could be left where they are.
As regards the impact of the 2017 revaluation on rates payable the rules state that the amount collected nationally after a revaluation is based upon the amount collected in the year before the revaluation plus inflation. So if the values of properties in the list on average go up the rate on the pound will come down, if the average property goes down the rate in pound will go up.
Individual changes will be very dependent on the type of property and location.
What I would say is don't forget that rateable values are based on rents so don't accept a rent increase, consider employing a surveyor to agree your rent (as a surveyor I would say that!). My experience is that when a tenant tells me has a special rent deal it usually special for the landlord not the tenant!
So I suspect that the limit will merely be adjusted along the lines of the total RV change although its suspected the total RV might go down in which case the limits could be left where they are.
As regards the impact of the 2017 revaluation on rates payable the rules state that the amount collected nationally after a revaluation is based upon the amount collected in the year before the revaluation plus inflation. So if the values of properties in the list on average go up the rate on the pound will come down, if the average property goes down the rate in pound will go up.
Individual changes will be very dependent on the type of property and location.
What I would say is don't forget that rateable values are based on rents so don't accept a rent increase, consider employing a surveyor to agree your rent (as a surveyor I would say that!). My experience is that when a tenant tells me has a special rent deal it usually special for the landlord not the tenant!
Thanks all for the replies, as I get letter through every year I assumed reviewed on a yearly basis. Hopefully I might be safe for a while longer then which will give me time to make the thing a bit more efficient.
Are you sure about rateable value based on rent? That doesn't sound right to me somehow.
Chrisgr31 said:
My guess is that the current system will continue for ever. Even without the discount individual ratepayers in small units contributed very little to the overall business rate take. If I had the time and inclination I could find the details but it is a small figure to collect, and the collection costs are proportionally high.
So I suspect that the limit will merely be adjusted along the lines of the total RV change although its suspected the total RV might go down in which case the limits could be left where they are.
As regards the impact of the 2017 revaluation on rates payable the rules state that the amount collected nationally after a revaluation is based upon the amount collected in the year before the revaluation plus inflation. So if the values of properties in the list on average go up the rate on the pound will come down, if the average property goes down the rate in pound will go up.
Individual changes will be very dependent on the type of property and location.
What I would say is don't forget that rateable values are based on rents so don't accept a rent increase, consider employing a surveyor to agree your rent (as a surveyor I would say that!). My experience is that when a tenant tells me has a special rent deal it usually special for the landlord not the tenant!
I wouldn't have thought it was so difficult to collect the majority of rates, just send a bloke round to check on units then contact landlord for details, send in a letter to collect rates. Non payment = go to court. I can see difficulties with some of the shadier tenants though.So I suspect that the limit will merely be adjusted along the lines of the total RV change although its suspected the total RV might go down in which case the limits could be left where they are.
As regards the impact of the 2017 revaluation on rates payable the rules state that the amount collected nationally after a revaluation is based upon the amount collected in the year before the revaluation plus inflation. So if the values of properties in the list on average go up the rate on the pound will come down, if the average property goes down the rate in pound will go up.
Individual changes will be very dependent on the type of property and location.
What I would say is don't forget that rateable values are based on rents so don't accept a rent increase, consider employing a surveyor to agree your rent (as a surveyor I would say that!). My experience is that when a tenant tells me has a special rent deal it usually special for the landlord not the tenant!
Are you sure about rateable value based on rent? That doesn't sound right to me somehow.
Business rates are just another tax but it does mean that the likes of Starbucks, MacDonalds etc pay some tax into the UK coffers.
One of my businesses has very little in the way of inputs so little VAT to reclaim. With VAT, business rates (at the full amount) and corporation tax on profits the government takes almost 40% of my turnover.
This is before I pay personal tax.
It does make you wonder why you bother.
BTW. business rates are about 6% of my turnover.
One of my businesses has very little in the way of inputs so little VAT to reclaim. With VAT, business rates (at the full amount) and corporation tax on profits the government takes almost 40% of my turnover.
This is before I pay personal tax.
It does make you wonder why you bother.
BTW. business rates are about 6% of my turnover.
227bhp said:
I wouldn't have thought it was so difficult to collect the majority of rates, just send a bloke round to check on units then contact landlord for details, send in a letter to collect rates. Non payment = go to court. I can see difficulties with some of the shadier tenants though.
Are you sure about rateable value based on rent? That doesn't sound right to me somehow.
You'd be surprised, there are significant numbers of businesses who don't pay, and use every trick in the book to avoid paying. A colleague once went to see a shop that had allegedly stopped trading and the property was now residential. The colleague got there and sure enough there was no retail in the property however they noticed the open closed sign was still on the door. So they drove back past at the weekend, and sure enough it was back trading as a shop. I have experienced others telling councils they have vacated when they haven't, or someone else is liable, or just refusing to pay.Are you sure about rateable value based on rent? That doesn't sound right to me somehow.
And yes rateable values are based on rental values, at present rental values in April 2008, from 2017 they'll be based on rental values at April this year. Its not a 100% match as the VO averages out rental values and of course has to apply rental values to properties that are freehold.
Chrisgr31 said:
And yes rateable values are based on rental values.
Ok, take this scenario; I rent an industrial unit, in order to give me more floor area I fit an intermediate floor (mezzanine). My rent stays the same, but if the council get to know my rates will go up, no?Edited by 227bhp on Saturday 5th December 13:55
227bhp said:
Chrisgr31 said:
And yes rateable values are based on rental values.
Ok, take this scenario; I rent an industrial unit, in order to give me more floor area I fit an intermediate floor (mezzanine). My rent stays the same, but if the council get to know my rates will go up, no?Edited by 227bhp on Saturday 5th December 13:55
Most occupiers put up their own Mezzanine and as such it's often not included in rental valuations. Having said that when it comes to new lettings often Mezzanines are not valued as you find they suit some occupiers and get in the way of others....
If the Mezzanine is supported only on racking, I think I recall that it should not be included (again same disclaimer on my knowledge age!)
You have to remember, the Rateable Value is the rent at which the premises would let - reflecting tenants improvements - mezzanines, plant & machinery, extensions etc. It sounds perverse that the more you improve your property, the greater the likelihood that the Rateable Value will increase. Business Rates at the end of the day are a tax on the occupation of property - the more it is worth, the greater the tax. Industrial mezzanines on average c£20 per sqm - if offices/staff accommodation +20-25%. Value can be sensitive to the value of the building.
If a mezzanine is storage/ manufacturing space it is valued at 50% of the standard £/m2. For the area below the mezzanine (referred to as AUS = Area Under Supported Floor) this is then valued at 70% of the standard rate. So effectively if you install a mezzanine and use it just for industrial use then it will cost 20% more in rates, even if you don't pay rent on it.
Even installing a wall mounted air conditioner will increase the rateable value as will parking spaces.
On a £4K rateable office two parking spaces were £500 each extra for a small office I was looking at.
One perhaps unintended consequence of the 100% rebate for small businesses is that some landlords who previously paid the rates on a building of small suites had them reassessed singly such that the occupiers claimed exemption but the landlords kept the rent unchanged. This is what mine did and saved themselves upwards of £15k a year. Thing is if the exemption goes the offices will be expensive. I'll certainly leave.
On a £4K rateable office two parking spaces were £500 each extra for a small office I was looking at.
One perhaps unintended consequence of the 100% rebate for small businesses is that some landlords who previously paid the rates on a building of small suites had them reassessed singly such that the occupiers claimed exemption but the landlords kept the rent unchanged. This is what mine did and saved themselves upwards of £15k a year. Thing is if the exemption goes the offices will be expensive. I'll certainly leave.
As Soxboy says a storage mezzanine in an industrial unit is usually effectively valued at 20% of the warehouse space. If it has offices on it it may be at 120%. Few years ago I went to Tribunal on one of those where the mezzanine was included in the rent, and it was clear the 120% was wrong. I lost and it wasnt worth an appeal.
Whether rack mounted mezzanine is rateable or not depends if it is a structure, if it is it will be valued if it isn't it shouldn't, although getting them removed can be a challenge.
Air conditioning will invariably add to the rateable value, car parking is less certain, in some areas it will in others it won't.
Whether rack mounted mezzanine is rateable or not depends if it is a structure, if it is it will be valued if it isn't it shouldn't, although getting them removed can be a challenge.
Air conditioning will invariably add to the rateable value, car parking is less certain, in some areas it will in others it won't.
Chrisgr31 said:
As Soxboy says a storage mezzanine in an industrial unit is usually effectively valued at 20% of the warehouse space. If it has offices on it it may be at 120%. Few years ago I went to Tribunal on one of those where the mezzanine was included in the rent, and it was clear the 120% was wrong. I lost and it wasnt worth an appeal.
Whether rack mounted mezzanine is rateable or not depends if it is a structure, if it is it will be valued if it isn't it shouldn't, although getting them removed can be a challenge.
Air conditioning will invariably add to the rateable value, car parking is less certain, in some areas it will in others it won't.
Yes but the fact still remains that in this case rateable values aren't based on rent, because the rates can go up and the rent stay the same.Whether rack mounted mezzanine is rateable or not depends if it is a structure, if it is it will be valued if it isn't it shouldn't, although getting them removed can be a challenge.
Air conditioning will invariably add to the rateable value, car parking is less certain, in some areas it will in others it won't.
I did hear that if the mez' wasn't actually touching the walls you could get around it somehow, but I think it's either an old wives tale or a loophole which was closed!
It's also a matter of actually being caught, if you are already registered (with the council) as a tenant and keeping your nose clean then the inspector will have little reason to visit, even if he does he has no power of entry if the doors are locked....
227bhp said:
Chrisgr31 said:
As Soxboy says a storage mezzanine in an industrial unit is usually effectively valued at 20% of the warehouse space. If it has offices on it it may be at 120%. Few years ago I went to Tribunal on one of those where the mezzanine was included in the rent, and it was clear the 120% was wrong. I lost and it wasnt worth an appeal.
Whether rack mounted mezzanine is rateable or not depends if it is a structure, if it is it will be valued if it isn't it shouldn't, although getting them removed can be a challenge.
Air conditioning will invariably add to the rateable value, car parking is less certain, in some areas it will in others it won't.
Yes but the fact still remains that in this case rateable values aren't based on rent, because the rates can go up and the rent stay the same.Whether rack mounted mezzanine is rateable or not depends if it is a structure, if it is it will be valued if it isn't it shouldn't, although getting them removed can be a challenge.
Air conditioning will invariably add to the rateable value, car parking is less certain, in some areas it will in others it won't.
I did hear that if the mez' wasn't actually touching the walls you could get around it somehow, but I think it's either an old wives tale or a loophole which was closed!
It's also a matter of actually being caught, if you are already registered (with the council) as a tenant and keeping your nose clean then the inspector will have little reason to visit, even if he does he has no power of entry if the doors are locked....
Keeping your head down is a tactic - but one to be wary of as it's not unusual for the VO can backdate increases back to the date of installation (I'm opening up a can of worms here, I know!). Essentially f it's a VOA error, that existed at the start of the list then any correction is done from the date of the list update. If it's a physical change after that then not telling them is just building up risk as they can backdate to the date of change. Again Chris will be able to tell you more - as they keep changing the blooming regs.
surveyor said:
RV's are based on rental value - not rent. The difference is important as a specific rent can exclude tenant's improvements, whereas the RV is based on the property as it exists.
Keeping your head down is a tactic - but one to be wary of as it's not unusual for the VO can backdate increases back to the date of installation (I'm opening up a can of worms here, I know!). Essentially f it's a VOA error, that existed at the start of the list then any correction is done from the date of the list update. If it's a physical change after that then not telling them is just building up risk as they can backdate to the date of change. Again Chris will be able to tell you more - as they keep changing the blooming regs.
Ok i'm with you on the value.Keeping your head down is a tactic - but one to be wary of as it's not unusual for the VO can backdate increases back to the date of installation (I'm opening up a can of worms here, I know!). Essentially f it's a VOA error, that existed at the start of the list then any correction is done from the date of the list update. If it's a physical change after that then not telling them is just building up risk as they can backdate to the date of change. Again Chris will be able to tell you more - as they keep changing the blooming regs.
Some time after I set up years ago I was green to all this and am now only slightly less so. I was working away (rates free) when the inspector wandered in through the open sign written doors and introduced himself
My answer to how long I'd been there was of course 'one week' and I don't think they can do anything about it. I'm not sure what a Landlord would do in that situation or whether they are consulted? Depends on how forceful they (Council) want to be I suppose, no-one but me would know the installation date of a Mez' I put in myself though so i'd be covered there 
Sometimes there's documentation, sometimes there is not. I would not lie for a client for several reasons. It's up to the client what they do, and I'm not really sure what the VOA can do if they don't think that you are telling the truth. - I suspect go on the worst case scenario, let you make an appeal and then prove it with receipts....
One of the more irritating things in life are daft clients. Mr Rating Surveyor to Mr VOA - As you can see it's in a bit of an alley that puts people off and consequently a poorer position. Mr Client, listening in - No it's great we see just as many customers... Rating Surveyor... Doh!
The proposals I've seen for the 2017 Rating LIst and the appeals are lets say interesting. If they make it through it's not going to be pretty - or particularly fair,
One of the more irritating things in life are daft clients. Mr Rating Surveyor to Mr VOA - As you can see it's in a bit of an alley that puts people off and consequently a poorer position. Mr Client, listening in - No it's great we see just as many customers... Rating Surveyor... Doh!
The proposals I've seen for the 2017 Rating LIst and the appeals are lets say interesting. If they make it through it's not going to be pretty - or particularly fair,
227bhp said:
Ok i'm with you on the value.
Some time after I set up years ago I was green to all this and am now only slightly less so. I was working away (rates free) when the inspector wandered in through the open sign written doors and introduced himself My answer to how long I'd been there was of course 'one week' and I don't think they can do anything about it. I'm not sure what a Landlord would do in that situation or whether they are consulted? Depends on how forceful they (Council) want to be I suppose, no-one but me would know the installation date of a Mez' I put in myself though so i'd be covered there
I act for a number of Landlords and what we tell the BA or VO depends on the circumstances, on occasions we are obliged to give information, but generally we don't volunteer information. I can't recall any occasion where the VO has asked me for the date that a tenant has made alterations to a property. However we do tell a council when we let a unit as we need to get rid of our liability to pay rates! We also usually tell a council when a unit comes back to us at the end of a lease, and if we have evidence that the tenant was in actual, physical occupation but has claimed the empty exemption before returning the unit to us we will tell the BA.Some time after I set up years ago I was green to all this and am now only slightly less so. I was working away (rates free) when the inspector wandered in through the open sign written doors and introduced himself
My answer to how long I'd been there was of course 'one week' and I don't think they can do anything about it. I'm not sure what a Landlord would do in that situation or whether they are consulted? Depends on how forceful they (Council) want to be I suppose, no-one but me would know the installation date of a Mez' I put in myself though so i'd be covered there I would be careful of lying to the VO or BA, as Surveyor has mentioned the VO can be prevented from back dating certain changes to assessments, but if you have deliberately provided wrong information then that might entitle them to backdate!
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