What do business rates pay for?
If you run a business in the UK, chances are that you’ll be paying business rates. These taxes are aimed at all companies that operate from commercial premises and are collected each year (usually in monthly instalments). The amount you pay depends on the building’s ‘rateable value’.
Is it expenditure for nothing in return?
Like most taxes, business rates are collected by the local council (and passed on to the government). Then, the money is put back into paying for things that will directly benefit your company, or at least, that’s how it should work in theory. So, while it may feel as though you’re paying out for no obvious gain, there are a lot of benefits to paying business rates.
What do business rates cover?
Road maintenance and repair
If your premises are by a road, then you’ll benefit from ongoing maintenance and repair of the road, which is especially useful if you or your staff / customers regularly drive to the office. If there are any potholes or other issues, you’re within your rights to get in touch with the council and request that the problem is addressed.
Street lighting is not only useful in terms of keeping the area safe at night, it’s also handy if you’re open in the evenings (for example, if you run a restaurant or bar). The lighting helps to illuminate your shop-front, increasing the chances of customers coming to visit you.
Access to the emergency services
Whether your building catches fire or you get burgled, it’s comforting to know that you have access to all the emergency services, 24/7. Your ongoing business rates ensure that there are enough policemen, firemen and hospital workers for the area – and that’s an important thing for the community as a whole.
Waste collection (some locations)
In some parts of the country, your business rates will also cover weekly waste collection. It’s a wise idea to check first though, as in other areas, you’ll have to pay to have it picked up.
The council may, from time to time, invest money into regeneration and improvement. The funds are often sourced from taxes but be aware that these regenerative projects could positively impact your business, bringing more people to the area and making it more attractive to visitors.
A Few Questions About Business Rates
Do you have to pay business rates?
Yes, you do. Business rates are a national tax requirement and it’s illegal to refuse to pay them.
How much do you have to pay?
This depends on the property’s ‘rateable value’, which is its estimated value if it were sold on the open market. In basic terms, the more expensive your premises are, the higher the amount you’ll have to pay.
Is there any tax relief available for businesses?
There are some business rates reliefs for some companies. The most widely used is the small business rate relief, which you’re entitled to if your property’s ‘rateable value’ is lower than £15,000. You can get full relief if your property has a ‘rateable value’ of below £12,000.