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Part two: paying the business rates
In this section we will tell you about:
- when to expect your bill
- other types of relief
- how you can pay your business rates
- what may happen if you don’t pay your business rates
Q13 When will I get the bill?
You will normally receive your business rates bill from your local council in March or April. It will tell you the amount you have to pay in the coming financial year and how the council has worked out that amount. Although your local council will issue the bill and you will pay your business rates to them, the bill will show information about the charges and services of all the various authorities working in your area, including county councils and police and fire authorities, who also receive some of the business rates.
The bill will also show the amount of each instalment of the total amount and the dates on which you should pay each one. The council will normally ask you to pay over 10 months.
Q14 Do I qualify for any relief?
As well as transitional arrangements, which we explained in part one, there are reliefs available for certain types of property. We can only explain them briefly here. If you think you qualify for relief, you should contact your local council.
You may be able to get relief if one of the following applies to you.
Your property is empty and unused. – In general there will be no empty property rates to pay for the first 3 months for non-industrial properties and for 6 months for industrial properties. After this exemption period an empty property will be liable for 100 per cent of the occupied rate.
However, listed buildings, small properties with a rateable value of less than £2,200, properties owned by Charities and companies in administration are not liable for empty property rates.
Your organisation is a charity. – If your property is used wholly or mainly for charitable purposes, you are automatically entitled to an 80 per cent reduction on your bill, although you will need to inform the council to make sure you receive it. Your council also has discretion to give you a further reduction, or to cancel the bill altogether.
Your organisation is a Community Amateur Sports Club (CASC) - If your sports club has registered with Her Majesty’s Revenue and Customs as a CASC and is wholly or mainly used for the purposes of that club or other registered clubs, then you will be entitled to 80 per cent mandatory relief. Your council also has discretion to top the relief up to 100 per cent.
Your organisation is a not a charity but is another type of non-profit making organisation. – You are not automatically entitled to relief, but your council has discretion to grant up to 100 per cent relief. To qualify, the organisation must be charitable, religious, or concerned with education, social welfare, science, literature or the fine arts, or the property must be used by a non-profit making organisation and used wholly or mainly for the purpose of recreation.
Your business is in a designated rural settlement with a population below 3,000 - The types of business that qualify for rural rate relief are:
- the only village shop, general store or post office with a rateable value up to £7,000
- a food shop with a rateable value up to £7,000
- the only village pub or petrol station with a rateable value up to £10,500.
These premises are entitled to a 50 per cent reduction in the business rates bill, or more at the council’s discretion.
Other businesses in a qualifying rural settlement may also be granted up to 100 per cent relief by the local council, provided the rateable value doesn’t exceed £14,000 and the business is of benefit to the community.
Part of your property is not being used and is completely unoccupied for a short time. – In these circumstances, the council may consider giving you relief to reduce the amount you have to pay. However, the council will only do this if they decide you are entitled to relief and if part of your property is clearly beyond use for a period of time.
You are suffering severe hardship and cannot pay your business rates bill. – Your local council may decide to give you up to 100 per cent relief. They normally only do this in extreme cases of hardship and for businesses which are particularly important to the local community. This is because local council tax payers will cover part of the cost of the relief.
You occupy a single property with a rateable value below £15,000 (£21,500 in London) (“small business rate relief”). - If you are a qualifying business occupying a single property with a rateable value of £5,000 or less, you may be entitled to 50 per cent relief. For qualifying properties with a rateable value between £5,001 and £10,000, relief is based on a sliding scale with zero per cent relief for properties with a rateable value of more than £10,000. Qualifying properties with a rateable value below £15,000 (£21,500 in London) will have their rate bills calculated using the small business non-domestic rating multiplier.
In some cases, ratepayers occupying more than one property can qualify for the relief, provided the overall rateable value threshold is not exceeded. Also, certain changes in circumstances need to be notified to the council. Small business rate relief is not granted automatically - you need to apply to your local council.
If you think you may qualify for any of these reliefs, you should contact the business rates section of your local council for more information and advice on how to obtain the relief.
Q15 What if my authority does not grant me relief?
There is no set appeals procedure if you disagree with your council’s decision not to award relief, but your local authority will have its own procedure in place for dealing with such disagreements. You may wish to obtain independent advice if agreement cannot be reached.
The government cannot overturn a decision by a council not to award relief.
Q16 What if I can't afford to pay my bill or I think it is wrong?
If you feel you cannot pay the bill or any of the instalments, or you think the bill is wrong for any reason, you should contact your council straight away. If you are having problems, your council may be able to help by changing the amounts and dates of your payments.
If you and the council agree, the council may also take a charge against your property for up to three years. This is a legal agreement that acts as security for the council. It means that if you have not paid the amount in full when the property is sold, you agree that the debt will be repaid from the proceeds of the sale. Your local council can explain all the terms and conditions that apply, including whether interest will be due and the action they may take if the amount remains outstanding when the period of the agreement comes to an end.
Do not ignore your bill – If you do not pay it and do not agree, in writing, any other arrangement with the council, they may take action against you for recovery of the debt, which could increase the amount you have to pay.
Q17 What if I don't pay?
If you miss an instalment, you will get a reminder notice giving you seven days to bring your payments up to date. If you do not do this, or if, after a second reminder, you fall behind with your payments again, you will have to pay the outstanding balance of your business rates for the year. If you do not pay the balance, the council may start recovery action (see below).
Q18 What recovery action can the local authority take?
The council can apply to the magistrates' court for a liability order. The court will send you a summons telling you when it will consider the application and the amount the council want you to pay. This will be both the outstanding balance of your business rates for the year plus the cost to the council of making the application. You have the right to go to the court and give evidence as to why you feel you should not have to pay this amount.
Even if you decide not to go to court, you should speak to the council. The council will try to come to a reasonable arrangement with you for payment, but they cannot do that unless you contact them. If you make an arrangement and stick to it, you may not have to pay any extra costs.
Q19 What powers does the liability order give the council?
A liability order gives the council the power to recover the debt. Usually, the council will employ bailiffs to do this. This process is known as the ‘levying of distress’. The council should tell you that they are about to use bailiffs and give you another chance to make arrangements for paying your business rates.
If you still don’t pay, the council may instruct bailiffs to recover the debt. This could involve them removing your goods so that they can sell them and use the money to repay the debt. Or they may make a list of your goods and their values. As long as you agree to repay the debt, they will only remove your goods if you do not abide by the agreement.
You should bear in mind that if the council uses a bailiff, there will be extra charges that you will have to pay. These charges are set out in legislation and, depending on how the council recovers the debt from you, they can be quite high. It is better not to let matters reach this stage.
Also, you will lose the right to receive any interest you may have been entitled to if the council has to refund any money to you after a successful appeal (see Q29).
Q20 Does the council have any other powers to recover a debt?
If a person, rather than a company, owes business rates to the council, the amount can be regarded as a debt in proceedings to have that person made bankrupt. In the case of a company, the council can start proceedings to wind up the company.
Q21 What if I am unable to pay even after enforcement action has been taken?
Again if a person, rather than a company, owes the business rates, the council may apply to the magistrates' court for a warrant to send you to prison. The council will only take this step if they have already tried to levy distress, and you still have not paid.
The court will only issue a warrant for imprisonment if it is satisfied that you decided not to pay your business rates or that you were wrong to ignore your bills. The longest period you could be sent to prison for is three months.
Published 16 June 2008
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