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Business rates revaluation 2017 - what does it all mean?

26 April 2017

Business rates were revalued this April, affecting bills for 2017/18.

Business rates are set in proportion to the estimated rentable value of the property. Rising property values across areas such as London in recent times have meant that business rates under the revaluation for that area are now higher. On the other hand, rates bills will be lower in those parts of the country where property prices may have decreased.

Changes will be introduced with a cap to help ease the transition, to avoid a sudden change in rates bills for businesses.

Rates are normally reassessed every five years. The underlying property values used to calculate the rates are from the two years before. The rateable value is then combined with a “multiplier” figure to establish the actual rates payable.

Last time round rates were set in 2010 and based on 2008 values. This time the re-evaluation came into effect on 1 April 2017 and is based on rental values as at 1 April 2015.

Under the new rules:

  • properties with a rateable value of less than £15,000 will get small business rate relief
  • empty non-domestic properties with a rateable value below £2,900 are exempt from rates
  • transitional relief is available if the rates go up or down by more than a certain amount. The council will adjust the bill automatically if eligible.

Landlords with business tenants may also be affected. Changes to rateable value will have an effect on the amount of statutory compensation payable to the tenant under the Landlord and Tenant Act 1954. Therefore, if landlords oppose the renewal of a business tenancy benefiting from security of tenure, under that Act the tenant may be entitled to compensation. The level of compensation is calculated by applying a multiplier to the rateable value of the property. Landlords ought to take this into account when considering whether to oppose a lease renewal.

The changes to business rates are significant and businesses should check their rates bill carefully if they have not done so already. There is a new system of appeals called Check, Challenge, Appeal which seeks to resolve disagreements at an early stage. Businesses should use this process if they wish to appeal the new business rates assessed on their properties.

An experienced commercial property specialist, Alasdair deals with a wide range of work in relation to sales & acquisitions, development transactions, landlord and tenant and property management matters. He has particular expertise in property investments, property management, clawback, overage, options, business leases and development and security documents.

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Alasdair Garbutt LLB (Hons)
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