Help! New House - Business Rates

sidewinderflame

I've just bought a rural house that has an old outbuilding which was previously being used to run a business. I bought the house and the outbuilding for me was a nice bonus but something that I could quite happily do without.

My problem is that I'm now being billed for business rates depite not running a business and I'm at a loss as to what to do. I don't really want to spend £1200 a year on something that isn't happening but I realise now that as the building has a low ratebale value (£2650) it's actually exempt from business rates if I use it but not exempt if I leave it unoccupied (governments way of encouraging businessess to set up).

I really don't want to pretened I'm running a business from there and use the exemption threshold to avoid paying and I also don't want to rent it out to somebody else (it is my home after all).

Does anyone know what I could do to avoid this tax or even have it delisted? Would contacting the council and applying for "change of use" to say a residential amenity mean that I am not liable for the rates? I naively assumed during the purchase that as long as I let the council know that there is no business operating there then that would be the end of it but I see now that it is way more complicated than that.

I am going to speak with the council tomorrow but it will help if I'm a bit more clued up with some options beforehand.

Thanks for any advice.

anselld

You can apply for change of use. I suspect the Council would continue to charge Business Rates until permission is granted.

Or you could demolish it.

Grant_Urismo

The Gov.uk site seems to say the opposite - you can get a 3 (or possibly 6) month business rate exemption if the building is empty (this forum won't let me post the link, but google "6. Exempted buildings and empty buildings relief" and you'll get there).

sidewinderflame

Thanks so much for your replies.

"Or you could demolish it."
I would love to demolish the building as it looks horrid but it is really large (around 200 sq/metres) so could be very costly, plus I wonder whether down the line if I wanted to put something else there instead it would be easier to get planning with an existing building in place.

"The Gov.uk site seems to say the opposite - you can get a 3 (or possibly 6) month business rate exemption if the building is empty (this forum won't let me post the link, but google "6. Exempted buildings and empty buildings relief" and you'll get there)."
This is true but once the six months have passed (think I have a couple left) the building will then be due the full rate and unfortunately I am just £50 over the unoccupied exemption threshold when it changes in April this year.

It's annoying because if I run a business from there then I have £0 in business rates to pay (I am below the £6000 occupied threshold) but if I leave it unoccupied then I am £50 over the unoccupied exemption threshold (£2500) and have £1200 per annum to pay! I do get it though, as it's all to do with the government trying to encourage people to use their existing commercial units for commercial reasons which does make sense but having really only intended to buy a residential property I wasn't expecting to take on a business too.

I think "change of use" seems to be the best solution on a permanent basis. I believe that whilst the application is going through, business rates aren't charged but hopefully I won't have to make the building "fit for purpose". If I had to spend money on that then I may as well spend it on demolishing the building. I think my new neighbours might appreciate it too!:j

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lincroft1710

The Non Domestic Rating List is maintained by the Valuation Office Agency (part of HMRC) and you will need to convince them that the property is no longer to be occupied as business premises. A grant of a change of use may suffice.

The downside will probably be that your Council Tax Band will increase, possibly by 2 bands or more, because you home will now be assessed as a standalone dwelling rather than being the dwelling part of a composite hereditament (business and residential premises occupied together). Also your home now has the benefit of a very large outbuilding.

Alternatively (and no guarantees) you could apply to the VOA for a reduction in the RV. But on April 1 new Rateable Vales will apply to all non domestic properties and you may find your new RV brings you into the exemption scheme.

Finally, removing the business use pp may reduce the value of your home.

sidewinderflame

Thanks for your posts and you're absolutely right. I spoke with the council today who me that I could get a "change of use" but as mentioned it could affect my council tax banding. They told me to contact the VOA.
I've spoken to the VOA this afternoon who are due to call me back this week and they said that it may affect my banding but I'm now trying to ascertain whether all outbuildings are due council tax or whether just those identified as "dwellings".

This building is a large metal prefab type building, very rusty, no insulation, no proper walls (metal) there's large gaps in the walls open to the rain and wind, no heating, no locks on the doors, no kitchen facilities, nowhere to sleep other than the floor but it does have a WC in a seperate room.

I wondered whether this could be considered a dwelling and thereby have council tax implications or whether it's just an outbuilding (maybe it makes no difference).

As mentioned the rateable values change in April and when they do I will be only £50 over the unoccupied exemption threshold as it's a small space. At the moment I am under the unoccupied threshold.
I'm just trying to workout now whether this is considered a residential dwelling or a non residential outbuilding.

elmer

You need to apply for Small Business bonus in the meantime, this is a 100% relief for properties that have a rateable Value of less than 6000 in England and 10000 in Scotland as long as you don't have any other business premises. I often award SBB to people like you who have a NDR property that they don't use for a business

elmer

steeeb

Did your solicitor not pick up on this?

sidewinderflame

No my solicitor didn't, but I've had a bit of a result which I hope is correct which relates to the post above in relation to small business unoccupied relief. I had been told that the threshold for unoccupied premises was £2600 which would put me £50 above the rateable threshold but having just got off the phone to the council they have told me that this is changing to £2900 in April which means I'm still below the threshold. If this is correct, (i'm just looking for this in writing online) then it solves everything and I can continue to claim unoccupied business relief and leave the premises empty. They said that as long as I don't use it for storage or anything then I will still be eligible. I have no desire to use this space partly due to it's condition so this will solve it.

Thank you to everyone who contributed and posted and I think I may have now got there. I was thinking of demolition earlier so this is definitely preferable.

lincroft1710

For CT purposes the building would be valued as an outbuilding to the main house, what may cause the increase is valuing the dwelling as a standalone, rather than as the dwelling part of a composite (dwelling and property used for non domestic purposes)

elmer

Small Business Bonus and Unoccupied relief are different, Please enquire from your council which will be most suitable, as unoccupied is not usually for an unending period, whereas SBB is not time limited, and if you needed to you would be able to use the building.

elmer