Non-domestic taxes, also known as business rates, are a levy on the use of land for non-domestic purposes. In other words, if you use a land for anything other than living, you would pay business rates. Non-domestic premises are usually subject to business rates. The following are examples of non-domestic properties:
- Shops, cafes, and pubs are all available.
- Offices, warehouses, and manufacturing plants
- Holiday vacation homes or guesthouses.
If you use a house, or a portion of a building, for non-domestic reasons, you must pay market rates. Business rates are an acceptable charge for tax purposes if you are expected to pay them.
What factors go into determining business rates?
The ‘rateable value’ of your property is used to measure business rates. The rateable value is determined by valuation officers of the Valuation Office Agency (VOA) and is based on a variety of considerations, including the size and location of the property.
How to calculate the company’s prices?
You will calculate your business rates by multiplying the rateable value of your property by the appropriate ‘multiplier,’ which is a figure set by the federal government each year.
The multiplier you use to calculate your market rates is also determined by the rateable value. A typical multiplier is applied to properties with a rateable value of more than £51,000, whereas a small business multiplier is applied to properties with a rateable value of less than £51,000. Wales and the City of London have different multipliers than the rest of England.
The rateable value of a property is multiplied by the multiplier to determine its business rates in England. Joey’s company, for example, has a rateable value of £15,000 and can thus be compounded by the small business multiplier. This was 49.1p (£0.491) in the 2019-2020 fiscal year. It’s then quick to calculate his basic market rates: £15,000 multiplied by £0.491 equals £7,365.
The following properties are excluded from paying business rates:
- Land and structures for agriculture
- Buildings that have been designated as places of public religious worship or as church halls
- Buildings that are used to promote disabled people’s welfare (including buildings that are used to train people in disability welfare).
It’s important to double-check that the property is excluded from paying business rates, since there are a lot of conditions.
Empty properties and business rates
If your land is vacant and unused, you will not be required to pay business rates. Since April 1, 2008, empty premises have been exempt from paying business rates for the first three months they are vacant. Owners must pay full business rates after this period has passed. Industrial and storage properties, on the other hand, could be eligible for a three-month extension.
Empty properties are not excluded from paying business rates indefinitely, since these fees are meant to encourage developers to reopen vacant warehouses, workshops, stores, and offices. Properties may be eligible for extended vacant property relief under such cases. Even after the first three months, empty premises are excluded from paying business rates if:
- It’s a historic structure.
- It has a taxable value of less than £2,900.
- It is a voluntary amateur sports association building, and its next use will be mostly as a sports club. It is managed by a charity, and its next intention of use will be charitable.
Work at home and business rates
As a general rule, if you only use a limited portion of your home for commercial purposes, you won’t have to pay business prices. If you’re a freelancer who works from home, for example, you don’t have to pay. You would, however, be forced to pay business rates under some cases.
If the land is divided into residential and commercial sections, you’ll have to pay business rates for the portions that aren’t used for residential purposes. If you own a corner store and live above it, for example, you’ll have to pay business taxes on the shop portion of the land because it’s different from your living quarters.
You’ll still have to pay business taxes if you sell items to people who come to the building. You might, for example, run a company out of your garage and market goods directly to customers. Furthermore, if you hire someone at the premises, it will be classified as an office, and business taxes will be applied.
How do you review the company’s rates?
If you’re uncertain if you should be paying business rates or want to know what your property’s “rateable value” is, you can call the VOA, where you can review your business rates. You may also use this service if you believe your property has been incorrectly priced or if you want to make a modification to the ‘rateable value’ of your property. The VOA service can also be used to look up the specifics of other properties’ valuations so that you can compare them.
When would you be able to get a rate reduction for your business?
Any businesses may be eligible for a business rate reduction from their local government. If your rateable value is less than £15,000, you might be eligible for ‘small business tax relief.’ Business cost relief may be available in certain areas or for certain categories of businesses.
Additionally, if your land is caused by major local damage, such as floods, renovation, or temporary roadworks, you might be eligible for a rate cut. You can make use of the VOA service. You should report major developments in your neighbourhood that could have affected your rateable value. These modifications could then be mirrored in the modifications of your business rates.
What is the purpose of your market rates?
Your company rates help to finance a variety of programmes all over the world. A part of your business rates goes to the city council, which uses it to help finance programmes like keeping the streets clean, dry, and well-lit at night, as well as improvements to public spaces like local parks and civic amenities. Some of the funds go to the Greater London Authority, which uses them to finance other vital agencies including the police and fire departments. Any of the corporate taxes are also paid to the government at large.