Business Rates Revaluation 2023

9 January 2023

From 1 April 2023 many businesses will be facing new business rates bills too, following new valuations of their properties to reflect more recent market conditions, as committed to in the government’s review of business rates. The Valuation Office Agency (VOA) has updated the rateable values of all business, and other non-domestic, property in England and Wales. These future rateable values will take effect from 1 April 2023.

What are Business rates and Should I be paying?

Business rates are a tax on property used for business purposes. Business rates are becoming one of the biggest overheads for small businesses that have premises valued at over £12,000. Most non-domestic properties will attract business rates including many, if not most, equestrian businesses. They may also be charged where only part of a building is used for non-domestic purposes. If you run your business from a commercial property- to say dedicated to use in the course of business- even in some cases when using a part of your home, it’s important that you understand the difference between domestic and non-domestic use, how they calculate business rates and how much you need to pay.

You won’t generally have to pay business rates if you only use a small part of your home for business purposes (for example, if you use a room as an office). But in some circumstances you’ll have to pay business rates on top of Council Tax – if, for example:

  • your property is split into domestic and business areas, for example in the case of a dedicated or separate  area from which you conduct your business
  • you sell things to people who visit the property
  • you employ anyone at your property
  • you’ve made changes to your home so you can run your business (like converting outbuildings)

Many businesses may find they do not receive a business rates bill, which may be because they have failed to declare their business activities to their local council, especially if this uses part of their home. No business can avoid or evade paying business rates if they are rightfully due, but there are steps that you can take to limit your liability, such as through legitimate use of business rates reliefs or exemptions (see below). Not declaring the location of a business to avoid paying business rates is known as business rate avoidance, evasion or even Business Rate Fraud, and those caught can suffer serious consequences including criminal prosecutions or substantial fines.

Business rates are a tax deductible business expense, so you can deduct the cost of paying them from your profits before calculating your tax. Even if you are exempt from business rates through various schemes or reliefs, you should still receive an annual business rates bill stating these exemptions and showing a zero charge.

The person occupying the property is responsible for paying the business rates. If you rent a premises that you use- either sole use or as part of a larger domestic or non-domestic property- that you operate your business from, you should be paying Business rates. Sometimes the landlord of the property charges the occupier a rent that also includes an amount for the business rates. This should be clearly detailed in your tenancy contract, and you should ensure as the occupier and business owner that the landlord is receiving the bills based on an appropriate value and exemptions. As the occupier it is your responsibility to ensure that the business rates have been correctly applied to your business premises.

If you’re not sure whether or not you should be paying business rates, you should contact the VOA.

How do they calculate the Business rates? 

Business rates are calculated using a property’s ‘rateable value’. The rateable value is a property’s estimated value on the open market as determined by the Valuation Office Agency (VOA) , regardless if you own or rent the property. The rateable value for your property is not what you may actually pay in business rates or rent. Your local council uses the rateable value to calculate your business rates bill. As a rule of thumb, the full rate for business rates is usually around 50% of the businesses rateable value (before any reliefs or exemptions are applied), and is split over 10 payments across the year.

The information released in November 2022 gives the future rateable values for non-domestic properties in England and Wales. You can check the factual information used by the VOA for your valuation and tell the VOA if anything is wrong.

Why is the 2023 Revaluation so important, and how might it affect me?

Business rates can be manageable if a business has factored them into its financial forecasts. The danger comes if and when premises are revalued. These revaluations are conducted by the Valuation Office Agency (VOA) and usually happens every five years (the last being 2017). Following new valuations of their properties coming into effect from April 2023, to reflect more recent market conditions, many business owners are likely to see some form of increase in their rateable value. Premises may also rise in rateable value for reasons beyond the occupiers control, such as changes to local transport links, the activity of other businesses nearby, or general market movements. A rise in rateable value does not necessarily mean business rates bills will go up by a similar amount. Your local council will calculate your bill by multiplying your rateable value by the multiplier set by the government. Over the last few months, the VOA has been contacting businesses to request rental information – look out for a letter, if you haven’t received one already.

What help is available?

 When your local council calculates your business rates bill, it will then apply any rate reliefs you are eligible for:

Please note the below information was current on the Business Rates section of the GOV website as of 10/01/2023

  • Small Business Rates Relief (SBRR) means that some businesses will not pay any business rates at all. This is generally if your rateable value is under £12000, although SBRR can be applied to businesses with values under £15000. If your property in England has a rateable value below £51,000, your bill will be calculated using the small business multiplier, which is lower than the standard one. This is the case even if you do not get SBRR.
  • Rural Rate Relief (RRR) meane you could get rural rate relief if your business is in a rural area with a population below 3,000 and your location meets other criteria in terms of the rateable value of local amenities.
  • Charitable Rate Relief means that registered charities will only pay 20% of their business rates bill. Charities and community amateur sports clubs can apply for charitable rate relief of up to 80% if a property is used for charitable purposes.
  •  Exempt Buildings and Empty Property Relief means that certain properties, or elements of properties, may be exempt from business rates. This could include agricultural land and buildings, buildings used for training or welfare of disabled people and buildings registered for public religious worship or church halls. However, there are strict legal requirements for these exemptions. 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 including industrial premises, buildings with a rateable value under £2900, properties owned by buildings or used by amateur sports clubs.
  • Hardship Relief: In England, councils can reduce your business rates bill with hardship relief.  To be eligible, you must satisfy your council that you would be in financial difficulties wihtout it, and that giving hardship relief is in the interest of local people.
  • Transitional Relief: Transitional relief limits how much your bill can change each year as a result of business rates revaluation. The next revaluation will come into effect on 1 April 2023. This means changes to your bill are phased in gradually, if you’re eligible. From the 2023 to 2024 tax year you’ll get transitional relief if your property is in England, and your rates go up by a certain amount. Your council will adjust your bill automatically if you’re eligible.
  • Retail, hospitality and leisure relief: You could qualify for retail, hospitality and leisure relief if your business is mainly being used as a shop, restaurant/ cafe/ bar, cinema, music venue or a hospitality of leisure business. If you’re eligible, you could get up to 75% off your business rates bills for the 2023 to 2024 tax year (1 April 2023 to 31 March 2024). You may be able to get retail, hospitality and leisure relief on top of other types of business rates relief you’re eligible for. See below for details on this scheme and how it may apply to equestrian premises.

The government announced a package of rates relief for businesses as part of the Autumn Statement 2022. The government will be taking a number of steps to help rate payers. A package worth £13.6 billion in total. They claim that this package means that the total increase in business rates bills will be less than 1%.

  • Extended and increased relief for retail, hospitality and leisure businesses: This is help available that is worth almost £2.1 billion. There was a lot of discussion during the Covid-19 pandemic about whether equestrian businesses fell within the ‘leisure’ sector. In 2020, the Sport and Recreation Alliance confirmed to British Equestrian that riding schools, livery yards and competition centres fall under the umbrella of those businesses considered to be ‘for assembly and leisure’ – provided they are normally open to the public – and as such were eligible for the help from the government during the pandemic, and should reasonably be eligible for the relief currently on offer from the Government.
  • Supporting Small Business (SSB) scheme: If your property received a considerably higher value than previously- due to pure increase in rateable value, or dur to improvements- the government have promised protection for small businesses who lose eligibility for either Small Business or Rural Rate Relief due to new property valuations through a more generous Supporting Small Business scheme worth over £500 million. The Supporting Small Business (SSB) scheme will provide over £500 million in support over the next 3 years to cap bill increases at £50 per month (£600 per year) for an estimated 80,000 properties at the 2023 revaluation. Together with the Retail, Hospitality and Leisure relief, no eligible small retail, hospitality or leisure business losing eligibility for SBRR will see an increase in bills greater than £12.50 per month in 2023 (£150 per year).

The government also confirmed its commitment to reform of the business rates system by delivering more frequent business rate revaluations.

In any of these cases, you should contact your local council to seek further information on the relief schemes and exemptions (some only apply to certain areas of the UK), and can also contact via your business rates valuation account (or other contact methods for properties outside of England) to advise of any exemptions that may apply.

If your property is in England:

Get an estimate of what your business rates bill may be from 1 April 2023 through our Find a Business Rates Valuation Service on GOV.UK.

You can also:

  • check the factual details held for your property
  • compare your property’s rateable value with similar properties in the area
  • check how your valuation was calculated.

You will need to sign into, or set up, a Business Rates Valuation Account to tell the VOA about changes to your property details. These changes can include things like floor area sizes, facilities, usage and parking.

From 1 April 2023, you will be able to use your account to let us know if you think your new rateable value is too high.

If your property is in Wales:

You can now see the future rateable value for your property and get an estimate of what your business rates bill may be from 1 April 2023 through our Find a Business Rates Valuation Service on GOV.UK.

This estimate is based on Wales’ 2022-23 multiplier and small business rates relief. The multiplier will be updated for 2023-24 before business rates bills are sent out by your local council and may result in a change to the estimate shown.

The future rateable value will be used to calculate your business rates bill from 1 April 2023.

What is the reason for these revaluations?

A revaluation makes sure rateable values reflect changes in the property market. This revaluation will reflect the changes in value that have occurred since the last revaluation six years ago. This includes the impact of the COVID-19 pandemic. Revaluations maintain fairness in the system. They help to redistribute the total amount payable in business rates. They are not carried out to generate extra revenue.

This article is a guide only  and information was correct at time of publication. For any questions about business rates bills, reliefs or payments you should contact your local council or the VOA.

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