2018 Business Rates Questions
1. What is the Business Rate?
The Business Rate is also known as the National Non-Domestic Rate (NNDR). This is a national tax based on properties or parts of properties not in residential use. Further information can found on the Government’s website https://www.gov.uk/browse/business/premises-rates
2. Why is it a national tax?
This is because the rate is determined by central government, not local government. This Council ( the billing authority) currently has no say in the calculation of the amount of rates to be charged but is required to collect business rates on behalf of central government and County Council having retained a small proportion for itself in accordance with the Business rates retention arrangements decided by the Government. (see Section 5 below)
3. How is the Business Rate charge calculated?
The Four main factors used to determine the Annual Rate Charge due on occupied non-domestic premises, such as offices, shops, factories, warehouses are:
The Rateable Value
The rateable value has historically been reassessed every few years by the Valuation Office Agency (an executive agency of HM Revenues and Customs) and for most properties the rateable value represents an open market annual rent on a set date. Rateable values in the rating list in force from 1 April 2017 are using a rental valuation date of 1 April 2015 but physical factors affecting the property may alter that assessment if the Valuation Office is made aware of them. Occupiers and owners have a right of appeal against their assessment (see Notes 10 - 13).
The council uses the rateable value provided by the Valuation Office Agency (VOA) to work out your business rates bill. You can check your rateable value and compare it with others on the VOA website
The 2017 Rating List
The Valuation Office Agency (an executive office of HM Revenues & Customs) produces and maintains the Rating List.
If you need to get in touch with the valuation office for any RV assessment or description challenge issues on a property you occupy or own you will be asked to Register on line and tell the VOA about anything that is wrong, needs to be reviewed or needs changing. Section 11 of these explanatory notes provides additional contact details.
The gross Rates payable from 1April 2018 (before any reliefs) have been calculated using the new Rate Multiplier which the Government has determined and which normally increases in line with inflation (CPI) between national revaluations.
The Multiplier or Rate Poundage(s)
The multipliers at the start of a rating list (2017) were set at a level which kept the total amount of rates raised nationally the same as the preceding year, after allowing for the effects of changes in the Retail Price Index and an allowance for anticipated losses from appeals against rateable values. For 2018, the government has increased the small business multiplier in line with CPI rather than RPI and left the supplement (the difference between the Small business multiplier and standard multiplier) unchanged
There are effectively two multipliers and for 2018, the small business rating multiplier is £0.480 and the standard multiplier is £0.493. The supplement is designed to pay for small business rate relief scheme.
Transitional surcharge/relief scheme 2017-2021
Following the revaluation for the 2017 Rating List and the setting of a new national multipliers, some properties experienced a significant increase or decrease in the annual rate liability compared to 2016 (Base Liability) using the lower multiplier for the calculations. In order to smooth out the effects of the revaluation exercise for individual properties, a five year transitional relief/surcharge scheme has been put in place to phase in those notional increases or decreases in annual liabilities each year until the charge falls within the percentage limits allowed, after which, the notional annual charges are calculated as Rateable Value x Rate Multiplier. If a transitional relief or surcharge applies for any period from 1 April 2017 this will automatically show on the relevant bill.
The actual calculation for transitional adjustments depends upon whether the property is large (RV over £100,000), medium (RV Between £15,001 and £100.000) or small (RV up to £15000) and whether it was a loser or gainer as a result of the 2017 national revaluation exercise.
Based on calculations using the lower multiplier and before any other adjustments for reliefs and the addition of any small business supplement for non SBRR qualifiers and an inflation factor, the notional yearly liability increase or decrease for the scheme will be limited to:
2017 Increases (from 2016) limited to 42% (large properties), 12.5% (medium properties), 5% (small properties)
2017 savings (from 2016) limited to -4.1% (large properties), -10% (medium properties), -20% (small properties)
2018 Increases (from 2017) limited to 32% (large properties), 17.5% (medium properties), 7.5% (small properties)
2018 savings (from 2017) limited to -4.6% (large properties), -15% (medium properties), --30% (small properties
2019 Increases (from 2018) limited to 49% (large properties), 20% (medium properties), 10% (small properties)
2019 savings (from 2018) limited to -5.9% (large properties), -20% (medium properties), -35% (small properties
2020 Increases (from 2019) limited to 16% (large properties), 25% (medium properties), 15% (small properties)
2020 savings (from 2019) limited to -5.8% (large properties), -25% (medium properties), -65% (small properties
The original plan was for the rating list to extend through to 31/3/2012 and transitional phasing limits from 20121were intended to be:-
2021 Increases (from 2020) limited to 6% (large properties), 25% (medium properties), 15% (small properties)
2021 savings (from 2020) limited to -4.8% (large properties), -25% (medium properties), -65% (small properties
The Government has decided that the next revaluation will have effect from 1/4/2021 so the above factors may not apply
2018 Bills will show the appropriate increase and an allowance for CPI inflation (1.03 for 2018) as the “Appropriate Fraction” (AF)
Small Business Rate Relief
A ratepayer who actually occupies a property subject to business rates in England with a 2017 rateable value up to £51,000 and who does not receive mandatory Charity or Community Amateur Sports Club relief will have their bill calculated using the lower multiplier even if they occupy premises elsewhere.
Additional relief may be applied for where a ratepayer occupies just the one business property in England with a rateable value below £15,000 (or where the ratepayer occupies more than one; but where every additional property has a Rateable Value below £2,900 and the aggregate Rateable Values for all properties do not exceed £19,999).
Empty properties will not qualify.
Existing qualifiers who subsequently occupy an additional property elsewhere, must notify the rates office as this event would normally disqualify them from receiving relief but the ratepayer may continue to receive their relief on the original property for up to 12 months if they remain in occupation and other qualifying criteria are still met.
Similarly, if there is a change in rateable value for a formerly disregarded property which the ratepayer occupies outside the authority boundaries, the Ratepayer will have a duty to notify the rates office promptly.
If a new ratepayer of a property with a rateable value below £15,000 believes they might qualify for the additional relief for their main property but no relief is shown on their bill, they should contact the rates office as soon as possible for advice.
New Application/Declaration forms may be downloaded from the Business Rates section of our website, obtained from the Rates Office (Tel: 01293 438615) or by emailing a request to . You may only apply for relief for one property in England and it must be your largest (RV) property (assuming it falls within the scheme).
The scheme allows for a 100 per cent reduction in the net charge for a qualifying property with a 2017 rateable value up to £12,000 and a reducing taper for qualifiers with a rateable value between £12,001 and £14999.
4. How does the Government know the amount of rates to be received from the Crawley business ratepayers?
Before the start of the new financial year, the billing authority must provide information from which an estimate of the annual liability is calculated.
In Crawley the rateable value used for this calculation is just under £271 million for 2018. By multiplying the rateable value by the lower national multiplier of £0.48 the gross total rate charge due for 2018/2019 has been calculated as just under £130 million.
After adjustment estimates for small business rate relief, unoccupied premises, rate relief, higher rate multiplier uplifts, appeals, bad debts etc. the Government has been advised that Crawley Borough Council expects to collect a net figure of around £122 million in respect of the 3,522 business ratepayers in the town.
An outturn calculation is made at the end of each financial year and the difference between the original liability estimate and actual liability is accounted for to the Government.
5. What happens to the rate income?
On the basis of the £119.96 million estimated collectable rate, this council will retain just under £5.16 million of the business rates for 2018.
The relatively small amount of Business rate retention is because the Government automatically takes just under £60 Million (50%) of the collectable rates and requires that we also pass just over £11.9 Million (10%) to the West Sussex County Council. In theory, this would have left the Council with just over £48 Million (40%) but based on our current estimate of yield for 2018, the Business Rate retention scheme rules about shares, levy’s, tariffs and safety net contributions mean that the Government will retain an additional £42.84 Million leaving us to keep around £5.16 Million (4.3%) of the Business Rates for 2018 in support of the services provided to the local community.
The Council will be required to make monthly contributions to the Government's from April each year irrespective of whether or not the council has actually collected the amounts due from ratepayers so the Council will expect ratepayers to pay their bills on time.
6. Does the overall grant settlement including the retained business rates cover all of the services provided within the town or those provided by Crawley Borough Council?
No. The retained rates and revenue support grant only pays for part of the cost of services provided locally.
Crawley Borough Council’s general spending power for 2018 will be around £14 million and will be financed by:
7. What about Council Tax and other services provided in the town?
Although Crawley Borough Council is charged with collecting the local Business Rates and Council Tax, not all the services in the borough are administered by this Council and as a Borough, we will retain only around 11.8 per cent of the Council Tax we collect.
Services such as Education, Fire Brigade, Social Services, Roads and Street Lighting are functions of West Sussex County Council and Sussex Police Authority is responsible for Policing.
The County Council will receive a share of the collectable business rates from each billing authority within West Sussex towards the cost of providing services throughout the county
Around 78.3 per cent of the Council Tax due from taxpayers in Crawley also goes to West Sussex County Council and 9.9 per cent to the Sussex Police Authority in support of the services they provide.
8. Who is liable to pay the business rates in Crawley where the property is occupied?
Where a business property, for example, office, shop, factory, warehouse has a rateable value shown in the Valuation Officer's Rating List, then a rate bill is normally issued to the ratepayer who is in occupation of the property.
Actual occupation of property is the key to liability for the non-domestic rate. Ownership of a legal title to the land or property is not necessary, although the occupier must have beneficial and exclusive use of the property.
9. If the property is empty, will there be a rate liability?
From the original vacation date (unused and empty of goods of trade), the property will be exempt from any empty rate liability for a short period (normally three months although non-retail industrial premises such as distribution warehouses, factories, storage and industrial workshops will receive an initial six-month exemption).
Thereafter, empty rate charges equivalent to full rates (calculated using the higher multiplier) normally apply to properties with a 2017 rateable value over £2,899. Small business rate relief cannot be applied to unoccupied properties.
Reoccupations must exceed a six-week period (continuous use) before any new exemption period can apply.
Liability for empty rate charges falls upon the owner, defined as "the person or Company entitled to possession".
10. What can I do if I feel the non-domestic Rate assessment (rateable value) is too high?
As mentioned previously, the non-domestic rate is a national tax set by central Government and is a form of property tax normally based on a hypothetical open market rent from 2015.
It is not based on the profitability of the individual business but a ratepayer who believes that the current assessment is wrong can make a challenge against the rateable value. Advice for your individual circumstances should be obtained on line and the Valuation Office Agency website address is: www.voa.gov.uk/valuation.
11. When can I challenge/appeal the Rateable Value?
Valuation challenges and appeals
You should register on line with the Valuation Office Agency as soon as possible if you feel that the latest Rateable Value is wrong.
If the challenge or appeal is due to a material change in circumstances you should contact the VOA as soon as possible after the change has occurred. Unresolved appeals are heard by independent valuation tribunals.
You may challenge or make an appeal against the current rateable value for your property as shown in the Rating List if:
12. What happens when I challenge the Rateable Value?
Once the Valuation Officer has received your challenge he should acknowledge it. Advice should be taken as you may need to provide evidence. The Valuation Officer will contact you with the intention of reaching a mutual agreement but if you cannot agree you may commence formal appeal procedures. If you make a formal appeal, you will have to pay any applicable up-front appeal fees and, if you decide to engage professional advisers, you will have to meet their costs too.
13. Having made an appeal, can I stop paying my rates?
No. The Government's Regulations require you to pay the rate charge based on the current rateable value until the appeal has been concluded. If you are successful in your appeal and the rateable value is reduced, then any overpayment of rates made will be refunded to you.
14. How else can Rate charges or payments be adjusted apart from appealing against the Rateable Value?
Mandatory Rate Relief
Within the Local Government Finance Act 1988 and subsequent Government Regulations, a reduction or relief may be available, but this is dependent on the particular circumstances of your occupation of the property.
Section 43 and 45 of the Local Government Finance Act 1988 allows Mandatory Rate Relief to be granted on those properties demonstrated as exclusively in possession of and, being wholly or mainly occupied by, a Registered Charity for charitable purposes. The relief granted is 80 per cent of the rate charged.
Properties occupied by Community Amateur Sports Clubs (CASC’s) who are registered with the Inland Revenue will also be entitled to receive 80 per cent relief from the date of registration.
Information about CASC registration may be viewed on the HM Revenue’s and Customs dedicated webpage http://www.hmrc.gov.uk/charities/casc/index.htm
Discretionary Rate Relief
Section 47 of the Local Government Finance Act 1988 allows rate relief to be given at the discretion of the Billing Authority as follows:
1. Relief may be given to "top up" those charities and CASC’s in receipt of 80 per cent Mandatory Rate Relief. If Discretionary Relief is granted then this diminishes the potential rate yield collectable by the Council. Granting relief may reduce the amount retained by the Council as part of the Business Rate retention scheme
2. Discretionary Rate Relief may also be granted where properties are occupied by Institutions or other organisations which are neither established nor conducted for profit and whose main objectives are charitable and are concerned with education, social welfare, science, literature or the fine arts. Additionally Discretionary Relief may also be given to properties being occupied for recreational purpose by a club, society or other organisation neither established nor conducted for profit. Granting relief may reduce the amount retained by the Council as part of the Business Rate retention scheme so the Council will also consider the financial impact on the Council Tax payers and/or the level of services available to the community if funds are diverted to support a particular organisation
Application Forms for discretionary rate relief for Charity and not for profit organisations are available on request from the Rates Office (Tel. 01293 438615) or email and must be completed and returned with all relevant information including the objects and constitution of the organisation and the most recent audited accounts. All applications are considered on their individual merits. The Council may also review all cases receiving rate relief on an annual basis.
3. From April 2012 Clause 69 of the Localism Act 2011 has amended section 47 of the Local Government Finance Act 1988 to allow local authorities to provide a discount from the business rates of any local ratepayer (not just those listed above) but subject to de-minimis state aid limits .
Some reliefs may be funded (such as Revaluation Relief or Pub Relief) where the Government wishes Councils to assist certain sectors on a temporary basis but although the Government has given Local authorities this new discretionary power, it is not normally fully funded and any new discretionary relief funding will have to be paid for by future increases in Council Tax Bills for the residents, from efficiency savings or increased charges for services or from funding currently already allocated to provide services to the community in general. If the Council were to consider awarding a discretionary discount where it is not fully funded we would have to be able to justify this, not only to Council Tax payers but also to other businesses who may be in a similar position and who might feel that they were being disadvantaged by a neighbour or competitor paying a lesser amount of rates. No budgetary allowance has been made for the funding of any unsupported applications received under section 47 of the Local Government Finance Act 1988 due to the insertion of clause 69 within the Localism Act. Ratepayers wishing to pursue this matter either individually or in partnership with other ratepayer will have to make a case which identifies the cost and duration for any application and which demonstrates that the benefit of providing extra discretionary rate relief will outweigh the financial or social costs to the Council Tax payers who will ultimately have to fund it. Each application will have to be considered on its own merits and within the constraints of existing budgets
Rate Relief on the Grounds of Hardship
Section 49 of the Local Government Finance Act 1988 gives a billing authority discretionary power to reduce or remit rate charges on the grounds of hardship in exceptional cases only. This provision is not intended to compensate for the effect of a recession or general economic downturn. Granting relief may reduce the amount retained by the Council as part of the Business Rate retention scheme and the funds available to support the services provided to Council Tax payers so the council must be satisfied that there will be a real benefit to the local community as well as a proven financial need by the business and the ratepayer must demonstrate this in any application. For example, where there is hardship as a result of unexpected, short term and localised factors (such as a natural disaster), an authority might use its power to assist a business to remain open if it would otherwise close resulting in a significant detrimental effect on the community.
Each case is considered on its merits and a written application should be made which sets out the reasons and the amount or period of relief requested, copies of the last years audited accounts, the most recent trading statement together with a trading forecast for the forthcoming period. A copy of the current criteria is available on request from the Rates Office (Tel. 01293 438615 or email )
15. When do I pay the non-domestic rate?
You have the right to pay by instalments on the dates shown on the front of the bill. For a rate bill issued in March in respect of a forthcoming Annual Charge from the 1 April, the default instalment scheme under the Government's Collection and Enforcement Regulations allows a maximum of TEN monthly instalments (excluding March) and requires Billing Authorities to specify the payment date to be shown on the Rate Demand.
However, since 2014 the Government has given ratepayers the right to request (in writing) to pay their annual rate charge over 12 monthly instalments from April to March rather than 10 monthly from April to January.
A ratepayer receiving an apportioned bill for part of the year may also request in writing to extend the payment plan through to 1st March providing the right to pay by instalments has not been lost due to default on an earlier plan.
In Crawley, the monthly instalment due date for business rate payments is the 1st of each month.
A new ratepayer who does not wish to pay by instalments can make a single payment in full within one month from the date the original bill was issued or, in the case of an annual demand and if agreed in writing with the Council, can make half-yearly payments for the current year on the 1 May and 1 October.
16. How do I pay the rates?
The facilities for payment are shown on the back of the rate demand. Payments may be made:
1. By completing a Direct Debit mandate form (available on line) so that the payment is made automatically via your bank on the first day of each month. This method is the most popular way of paying Non-Domestic Rates and is strongly recommended by the council.
2. Online internet payments can be made free by debit card using the link available on the council’s website www.crawley.gov.uk
3. By Standing Order, Bacs or Chaps. The council’s bank details are shown on the back of your Rate Demand. Please ensure that your Bank quotes your account reference Number for each payment made or send a remittance advice to Accountancy Services here at the Town Hall by post or E mail it to Remittances
4. By telephone. Please pay on line if possible. Alternatively you can make payment by Debit or Credit Card by telephoning 01293 438312 or 438738 on our automated telephone payments system at any time. Please ensure that you have your account reference number to hand.
5. By cash or cheque paid at the Cash Office in the Town Hall during the opening hours from 9.30am to 3.30 pm Monday to Friday (except Public and Bank Holidays) or by post. (This is a services which may end and which is being reduced over time as the Council encourages payment through electronic means). Postal cheques may be sent quoting your account reference number but electronic payment transfers are preferred.
17. What happens if I don’t pay my rates?
The council must pay over the Government’s share and tariff within a strict monthly timescale starting in April each year
The Government assumes an efficient and effective system of collection using all the powers provided in the regulations. If the Council fails to collect the rates by the due dates, it quickly finds itself with a shortfall and consequential cost affecting the Council’s cash flow, budgeted income and the funding of local services to the community.
Late or non-payment of business rates can increases the level of Council Tax or could cause a reduction in the level of local services to all Ratepayers and Council Taxpayers.
If payments are not made as prescribed on the rate demand, a reminder is issued demanding payment of the arrears. If that payment has not been made within seven days, then within a further seven days the balance of the year's rate must be paid in full.
Should this payment remain outstanding a summons will be issued and the matter referred to a Court of competent jurisdiction either a Magistrates Court or a County Court. If a Magistrates Court Summons is issued it would be for the purpose of obtaining a Liability Order. Should this happen, the Council will seek their reasonable costs in taking this action.
Where a Liability Order has been granted and a voluntary agreement to pay has not been made, or where an agreed payment plan has not been maintained, the Council may refer the debt to an approved Enforcement Agent for collection or to an Insolvency Practitioner. Alternatively, the Council may pursue the matter in the County Court, which may result in a County Court Judgement being granted and costs being awarded (costs will vary depending on the level of the debt).
If a County Court judgement is awarded this will affect the Ratepayers credit rating. Furthermore, if the debt remains outstanding the Council may refer the debt to an approved Enforcement Agent for collection, or to an Insolvency Practitioner or seek a Charging Order on the property.
It should be noted that only one reminder notice will be issued and that default in respect of any later instalment will result in the cancellation of the instalment plan and the issue of an Intention to Summons Notice requiring payment of the full outstanding balance within seven days.
18. What happens if the council refers a debt to an Enforcement Agent or an insolvency practitioner?
When Enforcement Agents are instructed to recover outstanding rates they have the power to remove goods, furniture and fittings and equipment to be SOLD to realise the value of outstanding rates charges and the charges levied by them. This is known as distress. The enforcement agent will charge you a £75.00 compliance stage fee as soon as they are instructed to collect. If they then have to visit your premises, another £235.00 enforcement fee (plus 7.5% of any value of the debt over £1500.00) will be payable by you. A sale stage fee of £110.00 (plus 7.5% of the value over £1500.00) also applies for attending premises to remove goods or prepare for the sale of goods.
If the Enforcement Agent is not successful in collecting full rate charges and costs in that way, then the Regulations provide for the Council to take proceedings for Committal to Prison or for Bankruptcy where the ratepayer is a sole trader. In the case of Limited Companies who are in arrears with the National Non-Domestic Rate, the regulations provide for billing authorities or Solicitors/Insolvency practitioners acting on their behalf to initiate liquidation proceedings in order to recover the outstanding rate charges and any additional costs and fees incurred.
https://www.gov.uk/browse/business/premises-rates a Government website providing business information and advice including Business Rates
https://www.gov.uk/voa/contact Business Rates information from the Valuation Office
tel: 01293 438615
fax: 01293 511803
email: Click to email us
West Sussex RH10 1UZ