Double Whammy of Business Electricity Bills and Business Rate Hikes

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by: Jonathan Elliott
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Date: Sat, 2 Jan 2010 Time: 12:31 AM
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Like business electricity bills, Business Rates are one of the biggest unavoidable overheads for small businesses. Most people are aware, often through their own direct experience, that business electricity rates can be reduced by switching from one supplier to another to take full advantage of ‘new customer' offers. Indeed, we take calls from 2,000 businesses a week looking to do exactly that and have managed to secure £100 million savings for our customers this year simply by switching their business electricity and business gas suppliers. Sadly there is no equivalent technique when it comes business rates but that's not to say you can't lower your bills… All too few small business owners are aware that the current legislation provides ratepayers a right to one appeal against their rateable value which, if successful, can result in savings in rates payable for up to five years.

We at Make It Cheaper, for example, managed to reduce the rates at the office we occupied in 2007 and 2008 using one of the UK's leading specialist firms of business rates advisors - Dalton Warner Davis LLP (DWD). Having inspected the property and conducted research into indicative levels of rental value at the valuation date (1st April 2003 for the 2005 Rating List), DWD established that the property's Rateable Value was considerably over assessed at. An appeal was lodged against the original assessment and, following detailed negotiations with the Valuation Office Agency, the Rateable Value was reduced from £39,500 to £28,750. This resulted in a reduction in rates liability totalling £11,227 during the time we were at the property.

Looking ahead, the new rateable values for all commercial property for the five year period between 2010 and 2015 will come into effect on next April and are based on rental values as at 1st April 2008. In many areas, there will be large increases in rateable value which could have significant financial implications for rate payers. Rents agreed on new leases, lease renewals and rent reviews around April 2008 will provide strong evidence of value for the new 2010 rateable values.

Since our last successful appeal we have moved into a new office where the rateable value has increased from £68,000 to £80,000 in the five year period between 2003 and 2008. This means that, unless we appeal, we're looking at an increase of nearly £10,000 a year, including 2p in the pound compulsory subsidy for the construction of ‘Crossrail'.

The VOA reckon that 60% of ratepayers will see a reduction in their rates bill as a result of the five year revaluation but that is little comfort for those of us seeing an increase. DWD say that city centre offices and retailers will be the hardest hit with industrial properties likely to experience the most modest overall increase in rateable values. Licensee trade magazine The Publican claims it has already been inundated with tales of huge rates hikes. One example it cites is Sheffield's Terminus Tavern whose rates will rise from £5,600 to £16,000.

Apart from an incorrect rateable value, there are a number of things that may make you eligible for business rate relief. EG:
• The property is empty
• The property is in a poor state of repair
• The property is now used for domestic purposes
• The zones used are not fair - eg if the premises are in an unusual shape
• This property is now more than one property
• You only occupy part of what you are being charged for
• Your rateable value is higher than comparable properties
• Your rateable value doesn't bear any relation to rent you're paying

Furthermore, rural businesses like a village shop or petrol station and non-profit organisations can apply for discretionary relief which can reduce the bill by 100%. Likewise, charities and amateur community sports clubs can apply for charitable relief which can reduce the bill by 80%.

The first thing to do is look up your business on the VOA website and see where you stand. If your rateable value has increased, particularly those over £20,000, you may want to consider using a business rate advisor to help you appeal. And while you're in the frame of mind to seek advice on your business bills, Make It Cheaper offers a free service that checks current energy contracts on your behalf, logs renewal dates and - during the notice window - will contact you with the best available business electricity and business gas prices in the market. Do both of these and you will be adding thousands of pounds a year to the bottom line of your business without spending an extra penny or as much as lifting a finger.

About the Author

Jonathan Elliott is Managing Director of Make It Cheaper, the UK's leading independent price comparison and switching service for business electricity & business gas as well as a range of products including: insurance and telecoms.

Contacts
For interviews, images or comments contact:
Jonathan Elliott
Marketing Manager
www.makeitcheaper.com
0800 970 0225