Taking effect from April 2017, the UK government has undertaken the first business rates review in seven years that will provide a new rating list for Wales and England.

Figures released for Wales indicate a 2.9 per cent decrease in rateable values for businesses in Wales.

However, the changes range drastically depending on sector and location.

Dan Smith, managing director of Newport-based M4 Commercial Property Ltd is advising business owners in advance of the new rating list they should review their new draft rateable values to allow them to budget for any changes in April.

What are business rates?

Business rates are a tax on the occupation of non-domestic properties, such as warehouses, shops and offices. The rateable values are set by the valuation office and the rates multiplier is set by the Welsh Assembly Government. The money is collected by local authorities who then give it to the Welsh Assembly Government who in turn redistribute to local authorities accordingly. This money is used to help fund the services that the councils provide.

What are rates revaluations?

Rate revaluations consist of changes to rateable values to reflect changes in the property market. It usually happens every five years - the most recent revaluation came into effect in England and Wales on April 1, 2010, based on ratable values from April 1, 2008. The next revaluation takes effect on April 1, 2017. This is two years later than expected. The change was postponed because the government wanted to avoid 'sharp changes' to business rates bills.

How do you know what your business rates are?

Business rates are worked out based on your property’s ‘ratable value’. You can estimate your business rates by multiplying the ‘ratable’ by the current government ‘multiplier’. At present, in Wales this is 0.486 and from April 1, 2017, this will rise to 0.499. All business rates valuations can be worked out online.

Rateable Value x Business Rates Multiplier = Rates Payable

Business Rates Multiplier 2016 = 0.486

Business Rates Multiplier 2017 = 0.499

Below are examples of how changes to rateable values and the multiplier will affect two properties we are currently marketing:-

Example 1: 1-2,000 sqft offices in 8 Waterside Court, Crindau, Newport

RV £16,250 x 0.486 = RP £7,897 (2016)

RV £13,250 x 0.499 = RP £6,611 (2017)

Example 2: 11,000 sqft industrial unit in 54 Springvale Industrial Estate, Cwmbran

RV £42,750 x 0.486 = RP £20,776 (2016)

RV £30,750 x 0.499 = RP £15,344 (2017)

What is business rates relief?

Business rates relief takes various forms including small business rate relief, rural rate relief, charitable rate relief or enterprise zones. Your bill will be reduced if your property is eligible for business rates relief. The most common of these is small business relief (SBR). In Wales, this briefly works by providing that no “small business” with a single property with a rateable value below £6,000 pay no business rates. Businesses with a rateable value between 6,000 – 12,000 receive a tapered discount.

Dan Smith said: “For the first time in seven years rateable values are changing. There will be winners and losers in the new ratings list. For example, our research suggests most retail units in Newport will see a significant drop in their rateable value, whereas shops in Usk are facing an increase. This comes at a time when particularly the retail market, is in a fragile position. It is important therefore that companies check out their proposed new rateable values and understand the implications as soon as possible."

Businesses can review their new rateable value now online at www.voa.gov.uk If they spot errors in their assessment such as issues with measurements of the building, these can be taken up with the valuation office prior to April and hopefully resolved.