Business rates revaluation 2023
The business 2023 rates revaluation of properties is now available. The much-needed correction, brought by the business rates revaluation, has helped to bring rateable values in line with rental values across the various sectors. Reductions have been seen in the retail sector, however most other sectors have seen an increase.
The system for challenging your business rates is known as ‘Check, Challenge, Appeal’, and is a three-stage process. Some businesses will be able to achieve a result in just the first two stages, Check and Challenge. Others, though, will have to go through the full three stages, which will require the case to go to tribunal for Appeal.
Are you prepared for the impact of the business rates revaluation of your business premises that became effective from 1st April 2023?
There have been some subtle changes introduced, the key ones being:
- The new list is only anticipated to last for three years.
- The transitional arrangements in England have been revised and there is no longer a downwards transition, so business premises that have had a reduction in their RV will have an immediate benefit. Upwards transitional arrangements will remain, which will help cushion increases in rates payable for properties with higher rateable values. Caps of 5%, 15% and 30% for small (under £20,000 RV), medium (£20,001-£100,000 RV) and large (over £100,000 RV) properties, respectively for the financial year 2023-24.
- There is now a deadline for checking and challenging the current rating list, 2017, and this is 31st March 2023.
6 years since the last valuation list was updated, the 2023 business rates revaluation will hopefully have brought the rateable value of your commercial property in line with market values. The new rating should fairly reflect the prevailing value of your property and not an inflated value, as has been the case with certain sectors such as retail. However, the rating assessment may not be accurate, whether that be the physical aspects of your building – such as size, use and amenity, or the value adopted.
The Valuation Office has compiled the new list which is based on a valuation date of April 2021. They gather this information mainly through the issue of ‘Request for Information’ forms. The 2023 rating list is now available to view at https://www.gov.uk/find-business-rates.
KWB has compiled its own data on rental values and is able to advise clients on the new rateable values and whether they are accurate.
Act now to reduce business rates
It is therefore essential that any business occupier or commercial property owner looks at their current business rates calculation (based on the 2017 business rates revaluation) to see if there are any grounds to check/challenge for a business rates reduction. This could mean savings in rates already paid going back to April 2017 as a business rates rebate AND possible savings going forward in respect of transitional relief if applicable.
In addition, the 2023 list is now available to view, and provides the opportunity to submit a check/challenge if you feel that it is inaccurate.
Check, Challenge, Appeal
This process, which was introduced for the 2017 rating list, remains the same.
Firstly, as an owner-occupier, you will have to formally claim a property as yours, through the government portal. Once it has been ensured that the person challenging their business rates is the legitimate owner or interested party, they are able to assign an agent to their case.
In the preliminary stages, we will conduct a ‘desktop assessment’ of your property free-of-charge and, if we believe that the assessment should be challenged, we can conduct the ‘Check’ process of the measurements and valuation of the property for a fee. The potential outcomes of the ‘Check’ are that we may recommend going to the next stage, because we believe you could save money on your business rates, or, simply, peace of mind that your rateable value is correct.
When starting the checking process, we’ll go through the VOA’s valuation of all the floor areas and, if we disagree with it, we’ll advise on what it should be. The submission may contest floor areas which you may feel be incorrect or the description of property – for example, if space is used as storage – not retail – it will have a lower rateable value. This stage alone could reduce the rateable value, which in some cases would qualify companies for business rates relief.
In order to make a compelling case at the Check stage, and to make the process as quick as possible, the following backing information will need to be provided:
- Floor area calculations
- Tenancy agreements
The Check stage could find that the Valuation Office’s assessment of the property was correct, but that the concluded valuation is not. If this is the case, it will be because there is a discrepancy in another factor that affects the property’s value, and this is covered in the Challenge stage.
Producing your Challenge case will require the provision of:
- Comparable evidence of other properties
- Details of any change of circumstances in the area*
- A copy of the lease showing the rent may also be required
*which could have a significant, negative effect on the value of the property, such as major roadworks – these are referred to as ‘material changes’.
You have 4 months (16 months for material change challenges) from the Check stage to lodge a Challenge. From the point of your submission, the VOA then has 18 months in which to make a decision. If by this point they have not responded, we can go straight to the Appeal stage. Submitting an Appeal requires the payment of a fee of £150 or £300, depending on the size of your business. For larger businesses that have multiple sites or branches, claims must be made for each individual property.
Fees paid out of savings made
KWB business rates consultants have successfully checked and challenged numerous rating assessments on behalf of occupiers and owners, achieving significant refunds and future savings. We provide impartial business rates advice with initial ‘desktop appraisals’ and ‘Check/challenges’ for a fee geared to savings for the client.