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Stop Paying Council Tax!

Written by Simon Tolson on

Full Time Holiday Lets Should Be Business Rated And Get 100% Relief

One of the first questions I ask an owner who is interested in joining us is ‘Are you registered for Business Rates?’ and about half the time they aren’t.  Responses vary from a blank stare to ‘no we’ve kept our head down and avoided it’ sometimes accompanied with a nudge and a wink.

Getting business rated is not optional- if you qualify as a furnished holiday let for tax purposes (available for at least 210 days a year) then you need to be assessed and given a rateable value.

Now the system of business rates also known as Non Domestic Rates (NDR) has developed over many decades through many governments and is designed for business premises such as shops which are often on a long term lease.  In order to calculate a rateable value for a holiday let the Valuation Office has to estimate the rent that you would pay if you were leasing the premises from a landlord and as this pretty much never happens the whole process is extremely subjective – more Voodoo than science.

You’ll be asked to fill in a questionnaire or ‘Request for Information’ which will ask about levels of service.  You can download a copy at http://www.abovebeachcottages.co.uk/ownerswanted__tax.html.  The form asks a variety of questions about levels of service, rent achieved and where the property is advertised.  After a while you will be allocated a rateable value and a reference number.

Crucially you will also be allocated an ‘Effective Date’ which is your opportunity to get the application backdated as far as possible.

Your business rates bill is produced using a multiplier (pence in the pound) against the rateable value which is currently 46.2 for small businesses in England.

All this sounds complicated (and it is!) but the upshot is that your bill tends to be a bit more than the council tax.  if it’s more than 10% higher then it’s worth arguing about, in fact it’s probably worth arguing anyway no matter what the initial rating is!

Now For The Good Bit

Unless you also personally own other business premises (not in a company) you will be entitled to Small Business Rate Relief.  This was 50% for many years but in response to the recession was increased to 100% in October 2010 meaning that you pay nothing at all.  The rate is set in the budget each year and will be 100% until at least April 2015.

If you have successfully got your effective date backdated then you should be entitled to a refund of Council Tax paid.

Quick Guide To Getting Business Rated And Claiming 100% Relief

  1. Call the Central Valuation office on 03000 501501 and they will take some details and pass your case to the local valuation office who will call within 24 hours.
  2. Download the form at www.abcbusinessrates.co.uk , complete and send to your contact at the local valuation office.
  3. Once you have a rateable value and reference number call the Cornwall valuation office on 0300 1234 171 and ask to apply for small business rate relief.  They will issue a customised application form.
  4. Make the ‘Effective Date’ as early as possible and claim a refund
  5. Ask why your agent didn’t bother to let you know about this!

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Making great holidays happen in Cornwall