Business rates are extra taxes you need to pay on top of the rent for the place where you work. They are charged in advance of the next tax year in the same way that council tax is. Here are some examples of non-domestic premises:
- Stores and coffee shops.
- Pubs and warehouses.
- You rent out your vacation houses.
- Places of business.
But some buildings are not included. Some of these are:
- Buildings on agricultural land.
- Buildings that are used for teaching.
- Buildings that are used to help crippled people.
- Sites that have been approved for public religious worship.
- Halls for churches.
You won’t have to pay business rates on a building that has been empty for more than three months either.
If I work for myself, do I have to pay business rates?
Not often, no. Don’t pay business rates if you use a room in your house as an office or send things to people for sale.
You might have to pay, though, if you sell things to people who come to your property, run a cafe above which you live, or even turn your garage into a hair shop, among other things. To figure out how much you owe, you should first figure out how much your home is used for your business. This number comes from the number of places you work from or the number of hours you work from home.
HMRC must agree with your figures, even though it’s your choice how to do this. In this case, if you figure out that you work one hour a day and spend 23 hours at home enjoying your free time, HMRC will probably see that as odd!
How am I going to pay?
In February or March, you’ll get a bill ahead of time for the next tax year. After that, you should get in touch with the Valuation Office Agency (VOA). Also, if you live in Scotland, you should talk to your local inspector.
Can business rates be written off?
Great news! If your business has to pay rates, you can claim them back as a tax deduction on your Self Assessment tax return.
