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Business rates

Business rates are taxes that you have to pay on top of council tax for the premises that you work from. They are charged similarly to council tax in advance of the upcoming tax year. Some examples of non-domestic premises include:

  • Shops & cafes
  • Pubs
  • Warehouses
  • Holiday homes that you rent out
  • Factories

But some premises are exempt. These include:

  • Agricultural land buildings
  • Buildings used for training
  • Buildings used for the welfare of disabled people
  • Sites registered for public religious worship
  • Church halls

Also if a building has been empty for more than three months, you won’t have to pay business rates on them.

Do I pay business rates if I’m self-employed?

Generally no. If you use a room in your home as an office or if you sell goods by post, you shouldn’t be liable to pay business rates.

But if you sell things to people who visit your property or you run a cafe that you live above or even if you turn your garage space into a barber shop etc., you may need to pay up. To work out what you’ll owe, first you should calculate how much you use your home for your self-employed business. This calculation is based on the number of rooms that you work from, or the hours you spend at home working. 

And whilst it’s up to you how to work this out, your calculations must be seen as “reasonable” by HMRC. For example, if you calculate that you’re working 1 hour a day and 23 hours are for your leisure time spent at home, that will most likely be flagged by HMRC as unusual!

How do I pay?

You’ll be sent an advance bill in February or March for the upcoming tax year. Next, you should contact the Valuation Office Agency (VOA). And if you live in Scotland, you should contact your local assessor instead.

Can business rates be expensed?

Good news! If you’re liable to pay business rates, you can claim them back as an allowable expense on your Self Assessment tax return.

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