Rates relief on more than 1 property

[NewBusiness2016]

I have just read this on the .gov website:

"If you use more than one property When you get a second property, you’ll keep getting any existing relief on your main property for 12 months."

What about the second property? Does this mean we'll get relief on them both for 12 months, after which we'll only get it on one of them? Or none at all?

FYI, the rateable values are 8,000 and 5,500

 

[rach88]

I am afraid you will have to start paying full rates straight away for the second property (unless you qualify for any other reliefs).

And after 12 months you will no longer be entitled to small business rates relief on either property.

The only exception would be if the second property had a rateable value of under £2,900 (from 1 April 2017) - not the case here.

Sorry!

 

[NewBusiness2016]

Thank you Rach88. I did wonder!

What about this scenario...

One property is a unit that falls within the relief bracket (8k rateable value). The other property is a unit within a shared office block on which we wouldn't pay rates because the rates are included in the rent.

 

[rach88]

8k RV? The threshold for 100% small business rates relief is £6,000 (£12,000 from 1 April 2017) and the rate of relief goes down gradually from 100% to 0% for properties with a rateable value between £6,001 (£12,001 from 1/4/17) and £12,000 (£15,000 from 1/4/17). Note that rateable values are changing with effect from 1/4/17 as the revaluation takes effect.

The regulations simply say that if you occupy a second property with a rateable value above the £2,600 / £2,900 (from 1/3/17) threshold, you will no longer be eligible for small business rates relief (although you can keep the relief on your main property for 12 months). If you do occupy a second property, you must tell the local authority, and it is is a criminal offence to give false or misleading information when making an application for small business rate relief.

I suppose you could argue that "occupation" in this context must mean "rateable occupation". If a block of serviced offices is assessed as a single hereditament with one rateable value for the whole block, you will not be in rateable occupation of the whole hereditament since you would not have exclusive occupation / paramount control.

However, following a recent Supreme Court case (Mazars), serviced offices should definitely not be assessed as a single hereditament. Each lettable unit should be separately assessed for rates. This normally makes good business sense for the landlord too, as most occupiers of serviced offices will be eligible for small business rates relief.

Now that the limit for small business rates relief are increasing would moving to a single, larger property be an option?

 

[NewBusiness2016]

Thank you for the clarification on the "occupation" viewpoint - that precedent is worth noting!

I notice that the wording is "main property", rather than existing property. So, could we class the new, larger, property as the main property?

Yes, we've looked at moving to a single larger property but there's nothing available locally so we'd have to test the water a bit further afield.

 

[rach88]

No - looking at the way the regulations are written, I don't think you can choose to claim the relief on the new, larger property.

“(6) In determining, for the purposes of paragraphs (2) or (3), whether the ratepayer occupies only one hereditament in England (“hereditament A”), the ratepayer’s occupation of any other hereditament in England (“hereditament B”) shall be disregarded where the conditions in either paragraph (7) or (8) are satisfied.”;

(7) The conditions are—

(a)the ratepayer’s occupation of hereditament B started on a date after that ratepayer started to occupy hereditament A;

(b)on the chargeable day concerned, the ratepayer has occupied hereditament B for a period not exceeding 12 months; ...

http://www.legislation.gov.uk/uksi/2014/43/article/2/made

 

[rach88]

I should have mentioned, the other option is to create a separate company - a separate legal entity - to lease the second property. You would need to consider whether the saving in rates exceeds the cost of running two companies. See the other live thread on this topic (thank you kulture!)