If you own a commercial building you may have recently received your latest valuation notice for business rates, following the most recent five yearly adjustment of rateable values, affecting business rates bills from 1 April 2010. Unfortunately the timing of this revaluation exercise could not have been much worse. While businesses are currently suffering in the economic downturn, the rateable values have been calculated using property rental values as at April 2008, when the economy, and property values, were in a much better state. As a result, commercial property owners are concerned that although the Scottish Government has reduced the Uniform Business Rate, against which the rateable values are multiplied in order to calculate the rates due, some rates bills may rise significantly. To compound the misery, the Scottish Government has removed transitional relief, which previously enabled large increases in rates payments to be phased over a number of years. South of the border, transitional relief still applies.
However, while the Assessors were obliged to calculate the new rateable values by reference to the property rental values as at April 2008, it may be possible for property owners who believe that their rates revaluations are incorrect, given for example the changes happening to rental values in the Spring of 2008, to lodge an appeal. Rating experts in the property industry are already gearing themselves up for a deluge of such requests from disgruntled owners. However if you want to consider appealing you will have to move quickly - appeals can only be lodged within six months of the valuation notice for your property being issued, and no later than 30 September this year.
While transitional relief has been abolished, there are some rates reliefs available in certain circumstances. These are:
Renewable energy relief
This is a new relief for renewable energy producers, offering discounts from 2.5% to 100% on their business rates.
Rural rate relief
This relief is to support rural communities and applies to properties such as general stores, post offices, sole petrol filling stations and sole pubs. The thresholds for this relief are being increased for 2010 –11.
The small business bonus scheme
This is to provide relief to businesses with properties in Scotland with a combined rateable value of £18,000 or less, on a sliding scale (100% relief for properties up to £10,000, down to 25% for properties between £12,000 and £18,000). Also where the cumulative rateable value of the properties of a business falls between £18,000 and £25,000, this Scheme will give 25% relief to individual properties with a rateable value of up to £18,000. You may be aware that to help 'pay' for the cost to the Government of giving the Small Business Bonus Scheme relief, larger businesses pay a supplement on their rates, of 0.7 pence which is added to their Uniform Business Rate against which the rateable values are multiplied in order to calculate their business rates. This therefore brings their Uniform Business Rate up from 40.7 pence to 41.4 pence. It affects large businesses with properties with a cumulative rateable value of over £35,000.
Empty property relief
This remains the same for the current year, giving 100% rates relief to properties which are empty for the first 3 months and a 50% discount thereafter. However for some properties such as industrial and listed buildings and properties with rateable values of less than £1,700 there are no rates even after the first 3 months.
Again this remains unchanged. Where you are a registered charity and your property is used wholly or mainly for charitable purposes you may be entitled to 80% rates relief. Your local authority also has a discretionary power to increase this relief up to 100%.
Non-profit making organisations
Other than charities, while a non-profit making organisation is not automatically entitled to rates relief, local authorities have discretionary powers to grant up to 100% rate relief. To qualify, the organisation must be charitable, religious or concerned with education, social welfare, science, literature or the fine arts, or the property must be used by a non-profit making organisation and used wholly or mainly for the purpose of recreation.
Community amateur sports clubs
If the Club is registered with HMRC it may be entitled to 80% rates relief, and the local authority has discretionary powers to top this up to100%.
Of course if the Club is a registered charity then the relief relative to charities mentioned above applies.
Some relief is available for a property used for the breeding and/or rearing of horses.
Severe hardship relief
If a business is suffering severe hardship and cannot pay its business rates bill, the local authority might give the business some rates relief if the business is particularly important to the local community and if such assistance would resolve its difficulties.
Disabled persons relief
Up to 100% rates relief may be available if residential accommodation is provided for the care or aftercare of people who are ill, or if facilities are provided for the training of people or if welfare services or workshops for disabled persons are provided.
Exemptions from business rates
It is also worth mentioning that there are certain categories of business properties that are exempt from business rates and these include:
- Agricultural land and buildings;
- Fish farms, fishing and sporting rights;
- Public parks;
- Sites of automatic telling machines in rural settlements;
- Oil and gas pipelines;
- Diplomatic missions;
- Overseas armed forces in the UK.