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Merging Offices To Avoid Business Rates

Discussion in 'General Business Forum' started by Nighthawk Software, Sep 8, 2020.

  1. Nighthawk Software

    Nighthawk Software UKBF Contributor Free Member

    67 12
    We're looking at expanding and moving in to new office space. The place we have found however, is currently a small building, with the upper floor divided in to two separate offices 12B & 12C. We're considering taking both, and using the larger one as office space, while keeping the smaller one as a separate private office / conference room.

    However, correct me if I'm wrong, but only your first office is considered for business rate relief? If we were to take both, would we need to pay business rates for the second office?

    Given that this is going to be around £2k a year, it may be worthwhile looking at redeveloping the space to make it all one again.

    What would we need to do to make it considered a single space for business rates purposes? Would building a joining door between the two be enough, or would the whole adjoining wall need to be removed?
     
    Posted: Sep 8, 2020 By: Nighthawk Software Member since: Feb 12, 2016
    #1
  2. Darren_Ssc

    Darren_Ssc UKBF Ace Free Member

    1,242 382
    My previous office was part of 3 units, rented under licence rather than lease so I'm fairly sure the landlord was claiming rate relief on all 3?
     
    Posted: Sep 8, 2020 By: Darren_Ssc Member since: Mar 1, 2019
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  3. Mr D

    Mr D UKBF Legend Free Member

    24,305 2,949
    Seperate entrance to the other office? Fixed dividing wall between?
     
    Posted: Sep 8, 2020 By: Mr D Member since: Feb 12, 2017
    #3
  4. Nighthawk Software

    Nighthawk Software UKBF Contributor Free Member

    67 12
    Currently yes. Two separate doors to each office and a dividing wall. Although it's non-structural so can be removed easily (downstairs is all one office)
     
    Posted: Sep 8, 2020 By: Nighthawk Software Member since: Feb 12, 2016
    #4
  5. Mr D

    Mr D UKBF Legend Free Member

    24,305 2,949
    So other office can come and go as they want without going through anything rented by anyone else?

    Make that dividing wall permanent.
     
    Posted: Sep 8, 2020 By: Mr D Member since: Feb 12, 2017
    #5
  6. Nighthawk Software

    Nighthawk Software UKBF Contributor Free Member

    67 12
    i'm not quite sure what you're saying, or how that relates to my question.

    Would it be considered two separate offices, in which case I need to pay business rates on one, or can it be configured in such a way as to consider it to be one office?
     
    Posted: Sep 8, 2020 By: Nighthawk Software Member since: Feb 12, 2016
    #6
  7. Paul Norman

    Paul Norman UKBF Ace Free Member

    2,780 865
    It is not quite as simple as that.

    First, business rates relief is administered by your local council, and may work slightly differently from place to place.

    Secondly, the relief is not so much about how many offices you have, but how many square metres you have. A single office over the maximum size to qualify will not receive relief.

    If the second office takes you over that limit, the relief would be withdrawn from both offices.

    However, as I say, that may work slightly differently in your county, so it is worth checking with the council themselves how it works.
     
    Posted: Sep 8, 2020 By: Paul Norman Member since: Apr 8, 2010
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  8. Scalloway

    Scalloway UKBF Legend Free Member

    16,390 3,466
    The last time I tried to separate two bits of one building for rates I was told the dividing wall had to be a full structural brick wall to qualify.
     
    Posted: Sep 8, 2020 By: Scalloway Member since: Jun 6, 2010
    #8
  9. consultant

    consultant Your Business Community Staff Member

    5,664 797
    What is the current rateable value of the two offices?
     
    Posted: Sep 8, 2020 By: consultant Member since: Jan 21, 2008
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  10. Nighthawk Software

    Nighthawk Software UKBF Contributor Free Member

    67 12
    it's £5,300 for the larger one, and probably around 3-4k for the smaller one.
     
    Posted: Sep 8, 2020 By: Nighthawk Software Member since: Feb 12, 2016
    #10
  11. consultant

    consultant Your Business Community Staff Member

    5,664 797
    Posted: Sep 8, 2020 By: consultant Member since: Jan 21, 2008
    #11
  12. Nighthawk Software

    Nighthawk Software UKBF Contributor Free Member

    67 12
    Thanks consultant, I appreciate the total rateable value is below the threshold, my question is though are they considered one unit? They are physically divided by a wall, and have separate entrances... so are they therefore considered two units?

    Does it just depend on the paperwork done by the landlord? That is what i'm trying to establish.
     
    Posted: Sep 8, 2020 By: Nighthawk Software Member since: Feb 12, 2016
    #12
  13. consultant

    consultant Your Business Community Staff Member

    5,664 797
    The best bet is to speak landlord and confirm the are happy to let as a single unit and then to the council.
     
    Posted: Sep 8, 2020 By: consultant Member since: Jan 21, 2008
    #13
  14. Gill Courage

    Gill Courage UKBF Newcomer Free Member

    8 0
    I don't think location enters into the equation. It could be 5 miles down the road. They add up your rateable values for everything you have and the total is used to determine relief. So if the new one takes you over the limit you wouldn't get relief on one but not the other. You are rated as a whole business.
     
    Posted: Sep 11, 2020 By: Gill Courage Member since: Jun 25, 2019
    #14
  15. kulture

    kulture UKBF Legend Staff Member

    8,114 2,237
    So much incorrect information on this thread. Consultant is exactly right. Small business rate relief is a legal entitlement and not up to the whim of each local authority. Your entitlement will go if you let two premises each with a rateable value of 5K and 4K. It is up to the Valuation Officer to agree if the two properties can be combined into one, and of course you would need the landlord's permission. If they can be combined and the VO agrees to a single listing then you would get the relief. Probably 100% relief.
    The thing to remember however is that the government will be looking to claim back the 10K grants given to thes properties and may decide that eliminating this relief is a good idea. In which case all the change would be for nothing.
     
    Posted: Sep 11, 2020 By: kulture Member since: Aug 11, 2007
    #15
  16. consultant

    consultant Your Business Community Staff Member

    5,664 797
    @Gill Courage sorry, but I think you are wrong. The first property gets the relief and others are excluded.

    The only thing I cannot confirm if this applies to properties in separate boroughs/counties, but I believe it is per business.
     
    Posted: Sep 11, 2020 By: consultant Member since: Jan 21, 2008
    #16
  17. kulture

    kulture UKBF Legend Staff Member

    8,114 2,237
    The rules are very clear. You get 100% relief if you have one property and the RV is £12,000 or less. If you have two properties you continue to get relief on your main property for 12 months. After that you only get relief if your second property has a RV under £2900. So in this case you must combine the two or pay rates on both after 12 months.
     
    Posted: Sep 11, 2020 By: kulture Member since: Aug 11, 2007
    #17
  18. LanceUk

    LanceUk UKBF Regular Free Member

    110 36
    Maybe you should ask the question of whether you need a dedicated office? Looking at your website, as a bespoke software house (with some SaaS products?) you don't look like a shop that employs many 10s or hundreds of employees and being software, your developers can work from home easily? Yes, there are times when meetings are required - but people, including clients, are getting more comfortable with video conferencing. May be worth paying a serviced office type service where you get an address and conference rooms when required?
     
    Posted: Sep 12, 2020 By: LanceUk Member since: Jan 8, 2018
    #18
  19. Nighthawk Software

    Nighthawk Software UKBF Contributor Free Member

    67 12
    Thanks everyone who took the time to reply - although the amount of mis-information in this thread is a little worrying. I guess thats why you're always advised to speak to a professional rather than ask on forums.

    Just to update people a little - I spoke to the council, who were reasonably helpful. Their first question was "are the offices separated by a corridor", so i'm guessing thats the defining factor on whether they are two offices or not. Beyond that, they just say that they can get the relevant department to re-assess the rating for the two offices once I take the lease (but not before).

    It seems likely that in this case, because I would be taking the entire upper floor, then it can be assessed as one office, and therefore I wouldn't need to pay rates.

    This is certainly something I've considered, but I'm a bit weary of going down this route. Personally I just dont like working from home.. there's a lot of benefits of all being in the same room - it makes collaboration a whole lot easier.. not to mention the social aspect of it. I think in terms of job retention being in an office works a lot better too - why work from home for a local company if you can work from home for a london based company paying twice the wages?

    We also have a couple of new employees that have joined us from college recently - they still need a lot of training, and thats difficult to do over zoom/teams.

    Additionally.. having that local office just looks a lot better to potential customers. Maybe that will change in the next few years.. but to me a virtual company with no real office still feels a little cheap and unprofessional.

    I think working from home is fine one or two days a week, but not full time.

    However, with the climbing rate of covid cases being reported and the new restrictions being imposed from today - i'm now holding off on the office. The next month or two will be telling, but currently it looks like we'll be working from home again soon anyway, whether we want to or not.
     
    Posted: Sep 14, 2020 at 9:21 AM By: Nighthawk Software Member since: Feb 12, 2016
    #19
  20. John Hemming

    John Hemming UKBF Regular Full Member

    367 56
    Having a go at answering the question.
    I think the answer is yes. I am a landlord of some offices as well as using some of the offices myself and when rates are payable we have to pay on the smaller heriditament(s)
     
    Posted: Sep 14, 2020 at 9:31 AM By: John Hemming Member since: May 23, 2019
    #20