Business rates for pubs in England and Wales are calculated by the Valuation Office Agency, which makes estimations based on a pub’s ‘fair maintainable trade’.
UKHospitality previously warned that businesses would feel a “real hit” when the re-evaluated rates, which are used to calculate business rates tax, were put into practice.
Factors like the type of operation, the area and services available, such as food or sport broadcasts, are used to calculate the rate.
Check, Challenge, Appeal
Now, a pub has successfully appealed for its rateable value to be reduced under new Check, Challenge, Appeal regulations, which took effect last year.
David Brown, the landlord of the Fosters Arms in Bridgnorth, Shropshire, won a reduction in the first victory of this kind.
In its revaluation, the value of the pub increased by a fifth to £16,200.
After a decision by the Valuation Office Agency, the value of the pub has been reduced to £13,000. This was based upon fair maintainable trade of £190,000 and a percentage applied to arrive at a virtual rent of 6.9%.
Big savings
The reduction could mean business rates bills decrease by around 72% as the pub is now categorised under small business rate relief, which diminishes liability from 100% at £15,000 to nil at £12,000.
The pub could save around £22,300 over the next four years of the rating cycle, according to estimates from real estate adviser Altus Group.
Robert Hayton, head of UK business rates at Altus Group, said: “We are delighted for the publican on this case, and very happy to see that the new Check, Challenge, Appeal system is working to protect ratepayers from paying too much.”
“The Valuation Office Agency didn’t consider the ratepayer’s case had merit at the Check or Challenge stages but the system ensured an appeal could be heard quickly by the independent valuation tribunal, whose panel decided in the ratepayer’s favour.”
“Rateable values can go up as well as down so it is important to understand the risks before launching any Check, Challenge or Appeal.”