BLB’s Head of Commercial Property, Caroline Entwistle, considers how business rates apply to industrial property.
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Business Rates, or National Non-Domestic Rates, are sometimes described as the hidden cost of operating commercial property. They generate in the region of £30 billion for the Government annually.
Whatever the nature of your commercial property, Business Rates are inevitably payable. You will receive a Business Rates invoice in February or March each year covering the following twelve months.
How are business rates calculated?
Your local authority calculates Business Rates by taking a property’s rateable value and applying a multiplier set annually by the Government.
The Valuation Office Agency (VOA), part of HM Revenue and Customs, sets rateable values and revises them every five years. Your rateable value represents a professional assessment of a property’s annual open-market rent. A rateable value can alter if circumstances change, and there’s a right of appeal if you believe the value is wrong.
The Government’s website contains information allowing you to estimate the Business Rates payable for a particular non-domestic property.
Exemptions and reliefs
Although there are several Business Rates exemptions, none apply to industrial premises. However, there is a modest advantage for empty industrial property.
Generally, the first three months of empty business property qualify as a rate-free period. But the rate-free period for empty industrial and warehouse properties is six months. To qualify for the exemption, the local authority must visit the property to confirm it’s empty.
Non-Domestic Rating Bill
On 29 March 2023, the Government introduced the Non-Domestic Rating Bill to support businesses “by modernising the business rates system to incentivise property improvements and support more frequent revaluations.”
If enacted in its current form, valuations will occur every three years instead of the current five. Businesses with falling valuations will therefore see lower bills sooner.
The Bill also proposes a new business rates improvement relief. So, businesses making qualifying improvements to their building will not face higher business rates for 12 months. The government hope this will encourage widespread investment in upgrading business property.