London Borough Business Rates Guide

London Borough Business Rates Guide

In London, businesses face a myriad of challenges including business rates. This is local taxation, charged by each of the London Boroughs, and it applies to any commercial property for rent in London. Understanding and managing Business Rates is crucial for enterprises of all sizes. Failure to pay can have serious consequences for any business.

Understanding Business Rates in London

As commercial property taxation, Business rates are levied on most non-domestic properties. It serves as a crucial source of revenue for London Boroughs to fund essential services and infrastructure. As a London business, comprehending how these rates impact your bottom line is paramount.

London Business Rates are calculated based on the rental value of your property, determined by the government’s Valuation Office Agency (VOA). This is a separate unique measure that may be different from the current London property market value.

While some exemptions and reliefs (including small business rates relief) exist for certain properties and circumstances, it’s essential to stay informed about potential liabilities and available benefits. There are many London Business Rate checkers online, however, the best advice is to contact your London Borough directly for advice.

Failure to manage Business Rates effectively can burden your finances and affect your competitiveness in the dynamic London market. Therefore, staying abreast of changes in rates, seeking professional advice and exploring relief options can optimise your financial management strategies, ensuring sustained growth and prosperity for any London-based enterprise.

Business Rates in London

Factors Affecting Business Rates in London

The Valuation Office Agency’s ‘rateable’ value influences the amount of Business Rates payable. This is based on market conditions, location and property size. Areas with high demand and prime locations, such as prime retail spaces like Oxford Street and the West End, typically command higher rental values, resulting in increased business rates. Business rates in the City of London tend to be higher for similar reasons. Other areas in London have higher taxes such as the London Borough of Camden & London Borough of Newham. Their Business Rates tend to be higher because of a greater demand for local services, housing, education and so on.

Property usage significantly impacts business rates too. Retail spaces, for example, often face higher rates due to their potential for higher turnover compared to industrial or office spaces. The condition and amenities of the property also influence its rateable value.
Changes in government policies and regulations can have a profound effect on business rates. Alterations in relief schemes, such as small business rate relief or transitional relief, can impact the amount businesses are required to pay.

Economic factors, such as inflation and market trends, also play a role. London’s status as a global financial hub means that fluctuations in the economy and property market can directly affect business rates. If you’re considering a London-based business, understanding these multifaceted factors is crucial for choosing your location. It will have a significant impact on how effectively you will be able to manage your finances and be able to plan for the future.

Strategies for Reducing Business Rates in London

Reducing Business Rates in London

The main way to reduce business rates is through various forms of relief. Some schemes are applied automatically depending on the type, size and activities of your business.

For example, small business rate relief in the form of the Supporting Small Business (SSB) government scheme is applied automatically to relevant businesses. It will apply until 2026.

Other schemes include building improvement relief which reduces the impact of investing in properties and green energy, decarbonisation and low carbon heat relief which all support investment in green technologies.

London Boroughs can also apply discretionary or hardship Business Rate relief to businesses going through tough times or impacted by crime or other environmental factors. Rules and schemes vary from location to location, but it is always worth speaking to your local authorities directly if you are struggling to pay at any point.

The final type of relief available to London businesses applies to unoccupied properties. You don’t have to pay business rates for the first 3 months that a property is empty. For certain industrial properties, this period might extend to 6 months. After that period, however, it is important to note that empty properties will be liable for business rates again.

Charity & Good Cause London Business Rates Relief

This is why at ASTOP, we have a proven track record of matching unoccupied properties, liable for business rates, with charities and good causes that are not liable. If you’re the owner of a property in London that is unoccupied you will be liable for full business rates unless you rent the space to a good cause in your community. Then, your business rates’ liability can be reduced or removed entirely.

Navigating Changes and Updates in London’s Business Rates System

On April 1, 2023, the new rating list was published by the Valuation Office Agency (VOA) to reflect the changes in the property rental market between April 2017 to April 2021. This will have a significant impact on London Business Rates in this and future years. Some rates will have increased, however, others, such as retail, may have declined as high streets become less populated. If you’re unsure if you have been affected, contact your London Borough who should be able to advise forthcoming bills.

Other London Business rate reforms in the 2023 Bill include a new requirement for ratepayers to declare their circumstances annually and new rules on the completion of new buildings. Government policies related to transitional measures have changed too. They have moved away from revenue-neutral status meaning changes in property value can be applied immediately. Small businesses, for example, will not have to wait for reductions in rated value to be reflected in their bills.

It is important to keep abreast of legislative changes that will impact your business rate liabilities. If you need help or are concerned about paying, the best course of action is to contact your London Borough directly. ASTOP can help you reduce your liability for empty properties by working in partnership with charities and good causes. Contact us to discuss your circumstances and we would be delighted to help.

London’s Business Rates System