2023 Rates Review

From 1st April you will pay a different amount on rates.

Retail rates usually go down
Warehouses and offices usually go up
Transition relief limits rate rises over the next 3 years
No transition relief for empty properties in Wales

Lincoln & Co are expert in mitigating your rates if your commercial property is empty

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In Brief

England

Transition relief: Rate rise limited during 2023/4 to 5%, 15% or 30%
Empty properties: Same rates relief

Wales

Transition Relief: 67% in 2023/4. 34% the year after
Empty properties: No relief

Scotland

Transition relief: Rate rise for eligible properties expected to be limited to 12.5% for 2023/4. Local councils decide who is eligible
Empty properties: Same rates relief.

Northern Ireland

Transition Relief: No information published
Empty properties: No information published

More Detail

Why Revalue the Rateable Values (RV)

Revaluations are based on the rentable value of a property (also known as habitaciones) at a given point in time. The last valuation was undertaken in 2017, based on rentable values in 2015. This one has been based on rentable values in 2021.

How is a rateable value calculated in general?

The property is split into how the different parts are used and the area of those parts calculated. Each property is allocated to a rating area, which is an area where the properties are of the same type and in a similar area. That area has a price for each square metre for each usage type. So, by multiplying the area of the given type by the rate a rentable value for that part is calculated. These are then summed. Some adjustments may be made depending on the facilities and local conditions.

What else can affect the rateable value?

Fixtures such as air conditioning can affect the value.

Local issues, such as roads being closed off, areas being particularly run-down.

How does rateable value translate into rates?

This is where it gets complicated as there are many rules governing the calculation of rates. These depend on the part of the UK you are in as there are separate rules in England, Scotland, Wales and Northern Ireland.

For example, on a medium sized property (RV, say £50,000), the RV is multiplied by:

0.512 in England
0.535 in Wales
0.49 in Scotland
Between 0.50 and 0.59, depending on the county

How much have rates gone up as a result of the 2023 review?

This is wholly dependent on the type of property and its location. We have seen that the Rateable Values of retail properties have decreased, in some cases in excess of 30%. However, in most cases that we have come across they have increased, especially offices and warehouses where the increase in some cases has been in excess of 30%.

To ameliorate this each of the regional governments have the right to bring in transitional relief to help business cope with the rises in rates.

What Transitional Relief can I get from the increase in rates?

England:

The maximum rise depends on the rateable value:

Wales:

If the increase in business rates is greater than £300 per annum, the transitional relief will be 67% of their increased liability in 2023-24 and 34% in 2024-25. In 2025-26, all ratepayers will pay their full bill, subject to any other reliefs they receive.

Scotland:

The Scottish Government appear to have combined the 2023 transition relief with COVID relief. If the local council approves rises could be capped at 12.5% plus inflation for a pub, restaurant or hotel with a rateable value of less than £1.5 million or an office located in Aberdeen or Aberdeenshire.

Northern Ireland:

No information on Transition Relief was found for Northern Ireland.

What happens if my property is empty?

Since 2008 this has been an issue as landlords become liable for the rates. However there are reliefs.

England & Wales:

You do not have to pay business rates on empty buildings for 3 months. After this time, most businesses must pay full business rates.

Some properties can get extended empty property relief:

industrial premises (for example warehouses) are exempt for a further 3 months
listed buildings - until they’re reoccupied
buildings with a rateable value under £2,900 - until they’re reoccupied, depending on ownership
properties owned by charities - only if the property’s next use will be mostly for charitable purposes
community amateur sports clubs buildings - only if the next use will be mostly as a sports club

Scotland:

All empty properties can get 50% relief from non-domestic rates for the first 3 months they're empty. They can then get a 10% discount after that. Empty industrial properties can get 100% relief from non-domestic rates for the first 6 months that they're empty.

Northern Ireland:

There are no vacant rates payable for a property with a Net Annual Value (NAV equivalent to the RV) of less than £2,000. For properties with a NAV of £2,000 or more rates are not payable for three months from either the date a non-domestic property becomes empty or, in the case of a property which has never been occupied, the date Land & Property Services (LPS) has determined the property to be completed.

After the three month free period, rates will be billed at 50 per cent of the normal occupied amount. Please note the property must then be occupied for at least six weeks before a further three month free period can be applied.

This is where the Lincoln approach comes into its own and can save you up to 80% of the rates in England and Wales.

For more information contact Lincoln and Co.

Disclaimer

This information has been produced by Lincoln and Co Ltd and, whilst it expresses the information known in February, 2023, none of it constitutes advice.

It is a general paper and each property must be dealt with individually. For specific advice on empty properties, please contact Lincoln and Co. For all other advice, please contact your professional advisors.