Business Rates

The term business rates which may also be known by some people as non-domestic rates, are the tax on the occupation of non-domestic property. Business rates were introduces throughout England and Wales in 1990 by the Local Government Finance Act 1988. Scotland also gained business rates at this time but these were based on already established rates. In order to establish rates of each property, the property is assessed in regards to property value and rental value. A rating list has been generated by the Valuation Office Agency, operated by the Government, to establish which property fits where on the rating list. The valuations and valuation lists are assessed and redrawn every five years.
The taxes are collected and the responsibility of the local government as they are the one benefiting from the money. Any receipts are pooled centrally, rather than being sorted directly. Business rates contributed 4.35% of the total UK tax income in 2005/06, bringing an amount worth 19.9 billion.
The funds generated from business rates help to contribute significantly to the local services in which a business is based. The first tax on property was the Elizabethan Poor Law Act 1572; this was paid by the people living at the parish to help cure poverty. Taxes put in place to help the funding and development of local services date back to 1869. The General Rate Act 1967 was a new act put in place in England and Wales. This was similar to the current system and was based on a propertys rental value.
Business rates are issued to businesses by the local government, whom have the powers to chase payments and take the appropriate actions in regard to non-payment. The rate owed is calculated by multiplying the rateable value by the Uniform Business Rate. This rate is set by the Government of Britain and is uniform for all areas.
Subsidised rates are offered to charities and not for profit business, although this depends on the premises and is also at the discretion of the local authority within the property area.
As the UK economy is made up of many small businesses, a new rating list was introduces on the 1st April 2005. The Local Government Act 2000 created benefits to help small businesses; a small business relief of 50% for properties with a rateable value of below 5000 was introduced.
Certain properties are totally exempt from paying business rates, these properties have been decided by the Local Government Finance Act 1988, and due to this the decision is out of the hands of local authorities. The properties include fish farms, places of worship, lighthouses, sewers, parks, property in enterprise areas and visiting forces premises.
Quite clearly some properties mentioned above should not pay business rates due to the nature of their operations. It is also possible for part of a property to pay business rates and part of the building not to be charged business rates, depending on its location.