Why are we seeing a revaluation of business rates?
Rates come up for review every five years. This latest revaluation was meant to be done in 2015, but has been delayed by two years.
Are rates generally going up or down?
More than half (53%) of pubs are expected to see a decline in rates. 8% will see no change, but 38% will see an increase.
How are rates calculated?
In April 2017, all pubs will be issued with a new rateable value, which is the estimated annual rental value of your business. This figure will then be multiplied by an amount determined by business size and location.
How is that estimated annual rental value calculated?
Unlike most other businesses that are calculated purely on rent, pubs are valued on fair maintainable trade. This takes account of the type of pub, the area it’s in and the services it offers, such as food or sport. Because of this alternative calculation method, The BBPA (British Beer and Pub Association) has found that pubs foot 2.8% of the total national rates bill yet represent only 0.5% of national business turnover.
When do I find out my new rateable value?
A provisional rateable value is available online. The final confirmed rates that take account of the likes of transitional relief and supplements will not be available until April though.
Alternatively, pub owners can manually calculate likely rates before then, but without software to input these figures with transitional relief and supplements, the figures could be completely out of kilter.
“You could phone the valuation office and ask them yourself,” Adam Brooke from Christie & Co adds. “I'm not sure whether they would do that for you because it's the local billing authority that administers the rates. If you got someone kind there, they may be able to help you out, but I don't think they will want thousands of people phoning up asking what their payable rate is going to be.”
Am I entitled to rate relief?
You can check the eligibility and apply for small business rate relief, rural rate relief, charitable rate relief or enterprise zone relief online.
How much are rates going to increase or decrease by?
Large properties with a rateable value of more than £100,000 can see an increase of up to 45% in rates in just the first year. This is a substantial rise compared to the previous rates revaluation in 2010, which saw a maximum increase of 12.5% in the first year.
In contrast to this, pubs that are seeing a reduction in their rates will only see a reduction of up to 4.1% in the first year.
On the plus side, there is going to be a 5% cap on increase for 'smaller' businesses; this covers businesses with a rateable value under £20,000 outside of London and £28,000 in the capital.
Can I appeal?
If a straightforward mistake has been made with the provisional valuation, the valuation office can be alerted to that now. Otherwise, official appeals can only be made from April 2017 using the new ‘Check, Challenge, Appeal’ process.
“They have made it a lot more difficult to appeal,” Brooke explains.
“Previously, the appeal would state that the assessment is incorrect and it should be reduced to £1. You would historically put that on your appeal because it would be agreed somewhere between the [initial] assessment and £1, which gives you protection for every single amount.
“Going forward on this newer list you have to provide a fully evidenced document, which you will be going forward with for the rest of the appeal. You also have to provide a revised valuation, rather than £1. You should give a specific figure with all of the reasoning why.”