Business rates bills: do you know what’s on yours?

Businesses in the UK will soon be receive their Business Rates bills and surprise, surprise, there’s another increase. 

However, it's absolutely vital that you understand how your bill works. As many know by now, in last year’s autumn statement the government chose to increase business rates by 6.7% from the 1st of April 2024. This is in line with the September 2023 inflation rate. However, only commercial properties whose rateable value (RV) is over £51,000 will see this reflected in their bills.

As this year’s rates bills come in, many will be receiving this news for the first time. Whilst this increase shouldn’t break businesses, it may well become yet another financial burden. Especially, as these are the properties with the biggest liabilities. Quite simply, it could prove to be the last straw for many.

So much for government tax breaks!

Every local authority presents the information business rates payers need, but they all do it differently. Whether it is the calculations; format; or the information itself. Leaving many to decipher just what it is that's in their bill.

So, what is it that you should be looking for in your rates bill?

Ensure all details are correct (address, name, property etc.)

Check the schedule of payments due

The amount paid

The continuation of any reliefs

If there are any credits or debts on the account you were previously unaware of

All too often, small changes to rates bills can have lasting, negative impacts. So it;'s vital you understand your bill or are able to seek professional help in doing so.

While local authorities are responsible for distributing and collecting business rates, it is the Valuation Office Agency (VOA) who calculates and attributes them. 

Unlike smaller businesses, who will once again benefit from the freeze on the small business multiplier and the Retail Hospitality and Leisure (RHL) relief, medium and larger business will face their second increase in just twelve months. An increase that RVA Surveyors has said will cost business rates payers an additional £1.5 billion.

According to the government, in the first six months of the 2023 rating list alone, almost 40% of the submitted checks (the first stage of the government’s appeal process) were still outstanding by November. In this same timeframe, only 7% were resolved.

“Cases can be thrown out on the smallest technicality.” Anthony Hughes, managing director of RVA Surveyors, said. “How are people supposed to find the time to learn and navigate the complicated process set by the government to reduce business rates, while also running a business?”

“Physical, on-site inspections are the only way to ensure a property’s business rates are accurate.” Hughes added. “Given the size [of the VOA], it's not a stretch that they are able to inspect every commercial property within a rating list period.”

To learn more visit https://www.rvasurveyors.com.

(Image courtesy of Gerd Altmann from Pixabay)

SURVEY: 1 In 3 Worried About Keeping Up With Mortgage Payments In 2024

Recent findings from The Clifton Private Finance Mortgage Pulse Report 2024 shed light on the UK population's perceived ability to keep up with their mortgage repayments in 2024, as many come off low fixed rates onto new, significantly higher rate deals.

The data, collected from more than 350 form submissions on the Clifton Private Finance website between November and January, reveals some important findings that reflect the broader UK economy and public sentiment towards interest rates, inflation and the current cost of living.

Key highlights from the report indicate that 1 in 3 are worried about keeping up with their mortgage payments in 2024.

It underscores the significance of the multiple consecutive interest rate hikes by the Bank of England over the last few years, and how it affects everyday homeowners.

Clifton Private Finance’s mortgage brokerage experts have also offered their perspectives on the survey results, reflecting on the current trends and expectations within the mortgage and property sector.

"Mortgage repayments are going to pretty much go up for everybody. This year, lots of people came off 2-year fixes and saw an extreme spike in their repayments. But over the next 2-3 years I think the spikes will be lower because the rates will settle a little bit - I think we’ve seen the peak." Carly Cheeseman  Head of International CeMAP CeRER.

"People are definitely worried – we see a clear concern about repayments among our clients every day.

As brokers, we look at every possible avenue to alleviate these struggles, whether it’s increasing the mortgage term, switching some or all of your mortgage to interest only, exploring offset mortgage options, and of course comparing lenders to get the most competitive deal." George Abouzolof Senior Finance Broker CeMAP

The full report is accessible at www.cliftonpf.co.uk

Has the Revaluation Balanced Business Rates?

In March, the Non-Domestic Rating Bill was introduced in the House of Commons. This was the result of a lengthy review into the modernisation of the business rates system. A big component of this new bill is more frequent revaluations. Supposedly, this is to ensure that information on commercial property’s is updated more frequently and is therefore more accurate.

Attempting to modernise the tax system is nothing new. It's a fairly common request among business owners and leaders, and one ratings companies see on a daily basis. One that picks up steam momentarily around a new rating list. 

While shorter periods of time do offer the opportunity to update information more quickly, it is just that – an opportunity to do so. Without swift and dedicated involvement on behalf of the Valuation Office Agency (VOA), a shorter revaluation doesn't immediately offer a solution that fits everyone.

Requiring the relevant knowledge and expertise, which is information held by the VOA, business rates payers cannot challenge their liability without engaging the assistance and expertise of a specialist. 

The amount of time needed alone to take out of running a business to do so, is simply infeasible for many. Let alone having a complex knowledge of the inner workings of the whole business rates tax system"

So, how has the revaluation helped business rates payers?

Currently, the 2023 rating list is set to last for three years. For most, the only difference they'll have noticed is an increase that's simply going to stay elevated. So how has the revaluation helped businesses?

Challenging your business rates liability requires a tremendous amount of expertise. Whilst the VOA have the tools necessary to do so, they don't offer them to business rates payers to help individuals do so.

“We’ve said it before, and we’re going to keep saying it," opined Anthony Hughes, MD at RVA Surveyors, who laughed at the idea/

He went on to say: “Unless each individual commercial property is inspected within the three-year rating list, based on its own merits and unique assets, the information held by the VOA can never be entirely accurate. It's well within their ability to inspect every property within a rating list to ensure accuracy before a new revaluation. They have the manpower; they just need to have the willpower to do so.”

After a tumultuous few years, which saw businesses closing at an alarming rate, a support package for businesses was quickly put into place. Included in this was freezing the multipliers. During Covid, expanded retail relief was renamed Retail Hospitality and Leisure (RHL) which now covers 75% of the rates payable. 

UK Hospitality’s latest analysis predicts that an increase in business rates and the end of such reliefs will see an additional increase of £850 million in the next financial year for those in the hospitality industry alone.

While these have appeared as huge boons for business rates payers, they do come with limitations.

When the sticking plaster is removed, business owners and leaders will still be expected to pay the full liability. Many businesses will run foul and insolvencies will obviously increase. In the second quarter of 2023, there was an over 13% rise in insolvencies compared to the second quarter of 2022.

David Kelly, Head of Insolvency at PwC, said: "The data shows the UK has had the highest quarterly number (6,342) of company insolvencies since the financial crisis in 2009. In total, in the first half of 2023, there were approximately 13,000 corporate failures.”

Due to a crippling economic outlook, many business rates payers are still struggling as people tighten their purse strings. While revaluations offer the opportunity for more accurate and fairer business rates, it's the actions of the VOA and government agencies which will determine what effect it has for business owners and leaders.

https://www.rvasurveyors.com

(Image courtesy of  Peggy from Pixabay)