Business rates: a financial ticking time bomb (Part 2)
In the last of two articles on the financial crisis facing the owners and occupiers of commercial property following the business rates revaluation earlier this year, Mark Parnall, director with Parnalls in Launceston, explained the process for appealing against your assessment. In this article, he considers available rates exemptions and reliefs, options for reducing your overheads to relieve financial pressure and the process you will need to go through if you decide your business is no longer financially viable.
Click here https://www.parnalls.com/business-rates-financial-ticking-time-bomb-part-1/ to view the first article.
Exemptions and reliefs
Some businesses are entitled to a business rates reduction through a scheme of reliefs, while others may be able to benefit from a complete exemption. The rules are complex, with some exemptions and reliefs being applied automatically and others requiring a formal application, either to the VOA or to your local council.
An exemption may be available for:
- agricultural land and buildings;
- property used to train or provide for the welfare of disabled people; and
- registered places of worship and church halls.
Empty properties are usually exempt for either three or six months, depending on the type of property. Listed buildings or those with a rateable value of less than £2,900 are exempt until they are reoccupied.
Properties owned by charities and amateur sports clubs can benefit from empty property relief until they are reoccupied, but only if the new occupant is likely to be a charity or sports club, as appropriate.
Relief may be available if:
- you are a small business occupying one property with a rateable value of less than £15,000 or two or more properties with a combined rateable value of less than £20,000 (£28,000 in London);
- your business is in a rural area with a population below 3,000;
- you are a charity or community amateur sports club; or
- if you have started up a business, or relocated an existing one, to a designated enterprise zone.
Temporary relief may also be available if your premises have been affected by severe local disruption, such as extensive building works or a long-running road improvement scheme.
The amount of the relief granted will depend on your circumstances and the relief type applied for.
Extra help from the government
To help those businesses most seriously affected by the 2017 revaluation, the government has set aside £435 million to help soften the blow. Of this:
- £110 million has been earmarked for businesses which are no longer eligible for small business rate relief or rural rate relief to ensure that, for the year 2017 to 2018, these businesses will not have to pay an increase of more than £600 for the year or £50 a month;
- £300 million has been given to councils to add to their discretionary fund so they can help support businesses in their areas that they believe are most in need of help; and
- a large chunk of the remainder will be used to provide a £1,000 discount on the business rates payable for 2017 to 2018 by pubs occupying premises with a rateable value of less than £100,000.
In addition, if as a result of the revaluation the amount you will have to pay in business rates has gone up or down by more than a specified amount, transitional relief will be available from a £3.6 billion fund to ensure changes to your bill are phased in gradually over the next five years. The rules are complex, but in summary:
- small properties, defined as those having a rateable value of less than £20,000 (or £28,000 in London), will not see their ratings bill increase by more than 5 per cent in 2017 to 2018 and thereafter future rises will be capped according to a stepped system;
- medium-sized properties, defined as those having a rateable value of between £20,001 (or £28,001 in London) and £99,999, will not see their bill increase by more than 12.5 per cent in 2017 to 2018 and thereafter will be subject to a capped step increase; and
- large properties, defined as those having a rateable value of more than £100,000, will not see their bill increase by more than 42 per cent in 2017 to 2018 and will be subject to fluctuating stepped changes for the following four years.
Details of the transitional provisions if your rates bill has deceased can be found by clicking on the following link: https://www.gov.uk/apply-for-business-rate-relief/transitional-relief
If, despite the package of support being provided, the increase in your business rates liability means that you face the very real prospect of being unable to continue to trade, serious consideration will need to be given as to whether you want to try to save the business or simply close it down.
If you want to continue to trade then there are a number of possible options to consider, including applying to your local council for a short-term discount on the amount you have to pay through their business rates hardship fund. Every council operates one, although eligibility will be dependent on you being able to show that you will be in serious financial difficulty if a discount is not applied and it is in the interests of the local community that help is provided. You could also approach your landlord to see if they would be prepared to reduce your rent or, if your situation is particularly grave, you could consider making proposals to your creditors more generally about how your debts might be restructured to enable you to continue to operate.
If you have made the difficult decision to close your business down, then it is important that this is done in an orderly manner. You will have to negotiate the end of your lease, if you have one, and ensure that all your debts are settled. If you trade through a company then you will also need to take steps to wind the company up if it is no longer needed.
If you are unable to pay your debts in full then consideration will need to be given as to whether you should declare yourself bankrupt or your business insolvent. If you trade through a company then this decision will need to be taken quickly to ensure that you do not fall foul of the rules governing wrongful or fraudulent trading, for which the penalties can be very severe.
Your solicitor can advise you on your options and help you achieve the best outcome possible.
For further advice on the availability of exemptions and reliefs, or for help in keeping your business afloat in the coming months or years, please contact Mark Parnall on 01566 772375 or email firstname.lastname@example.org
Been Asked to Sign an Employment Settlement Agreement? Seek Advice Urgently...
Services Update: Continuity of Legal Service Provision
Advising You in Uncertain Times
Could carelessness on social media land you in court?
Is an electronic signature on a commercial property document acceptable?
What happens when there is no health & care LPA in place
Social Media Training for Businesses
Information to gather for your probate solicitor
Gazundering, what it is and how to avoid it
Relief from forfeiture – what happens if the tenant forgets to pay the rent?
Not so safe at work - compensation for an accident at work
New organ donation law: giving you control
Running a business from home
Have nude photos of you or your teenager been posted online?
Landowners’ rights and the Electronic Communications Code
Building in your back garden
Christmas is a time for giving (and inheritance planning)
Buying the freehold of your leasehold house
Redeveloping an empty pub for commercial use
Why it takes time to obtain the Grant of Probate
Social Media: The unconscious privacy threat
Is your reputation being threatened?
Making a will after your spouse or partner has died
Interns celebrate completion of internship at solicitors
Selling your home in a flat market, some top tips
Claiming compensation for a serious road traffic accident
New Media and Communications Court list reflects surge in internet defamation claims by Laura Baglow
Has your personal information been shared without your permission?
Planning your escape to the country, what you need to consider – part 2
Government consultation on new national model for shared ownership
Choosing a partnership structure
Planning for what happens when you die by Deborah Adams
Changes to legislation could offer protection for tenants in the private rental sector
Move to the country - Part One
The risks of DIY probate
Will your septic tank still be legal in January?
The death knell for ‘kiss and tell’?
Making a will when you retire
Selling your property at auction
Not looking so good - your guide to compensation for botched non-surgical cosmetic procedures
New threshold of seriousness in defamation proceedings
Legal considerations when building a granny annex
Choosing the right person for your power of attorney
Formal Interviews - Do you need legal representation?
Privacy rights and aerial images
Trustees’ duty to give information to beneficiaries
Five problems with a leasehold property
Taking your first commercial lease
Is your organisation protected from employee social media legal risk?
Have you been targeted by negative social media posts?
Farmers be alert when being inspected
Help for House Sellers?
Don’t let your digital assets end up in a digital grave
Valuing an estate for probate
Development proposals and your local authority search
What can you do if your child is injured in a serious accident
NetRights welcomes new protection for social media users
SHOULD I GET A LAWYER FOR A SPEEDING OFFENCE?
Supreme Court recognises that social media is a “casual medium” in libel battle
Choosing the best conveyancer who is right for you
Making a will after a second or subsequent marriage
Option or promotion agreement – which is best for landowners?
Anonymous pub and restaurant online reviews leave a bad taste
Have you had an accident involving a horse?
Help to Buy – beware of some cracks in the structure
Understanding Lasting Powers of Attorney
Changes to Energy Performance Certificate for Landlords
Had a cycling accident? Your route to obtaining compensation
New year, new home: tips to sell your home in the New Year
Tax Planning for your inheritance
Hearing loss: when your employer may be liable
Buying a home for your retirement, five things you need to consider
Farmers plan to diversify after Brexit
Ministers press ahead with probate fee shake-up - reports BBC News
Botched dental treatment? You may be entitled to compensation
Why a Health and Welfare Power of Attorney is a good idea
Will the new charge on building developments in Cornwall affect you?
Energy Performance Certificates – Do They Matter?
HMRC Challenging Stamp Duty Land Tax Payments
Ben Mitchell qualifies as a solicitor
The potential implications of Brexit on employment law
Appointing a guardian for your children
Houses in multiple occupation – new rules from October 2018
New Agriculture Bill published
Will Brexit affect my pension?
Dreaming of a holiday home? Sort out the legals before putting your feet up
Lasting Power of Attorney by Deborah Adams
Settled status after Brexit by Alexis Hager
How to choose an executor to administer your estate when you die
How overage agreements can boost profits from your land
Top tips for first-time buyers
How Could Brexit Affect My Farm?
Wills & Succession in Spain by Deborah Adams
Brexit – an international and local view by Alexis Hager, Litigation
Capital gains tax - important facts for non-residents of the UK
Buying a home: the importance of making sure the seller is entitled to sell
Changing a will after someone has died: it is possible and it could save you money
Your responsibilities when you have people working in your home
Sad passing of Battle of Britain pilot who served with Parnall family member
Considerations when buying a heritage property
Disciplinary proceedings at work: guide for employers
Employers should have a disciplinary process in place, but just following this may not be enough to avoid falling foul of the law and exposing yourself to the risk of an employment tribunal claim.