can’t-afford-to-pay-my-business-rates

What happens if I cannot afford business rates?

If you fail to stay updated with your business rates, local councils can take the following steps against your company:

  • A reminder letter will be sent to your business.
  • A summons will be issued, and costs will begin to accumulate.
  • A liability order will be lodged to permit bailiff action.
  • Bailiffs will be instructed to recover the outstanding balance.
  • Insolvency proceedings will be initiated against the company.

 

I can’t pay my business rates – what are my options?

Business rates are like a tax charged on properties used for business, not homes. They apply to different places like shops, warehouses, offices, and pubs or restaurants.

 

How much will I have to pay in business rates?

There isn’t a fixed amount every business pays; instead, each property gets assessed individually and given a ‘rateable value.’ This value decides how much you’ll be charged. The rateable value is based on how much rent the property could get on the open market. So, if a property is worth more, the business rates will be higher. That’s why places in popular spots, like shops on busy high streets, usually have a higher business rates value.

Remember, the rateable value isn’t the exact amount you have to pay. It’s used in a calculation to figure out your actual business rates.

 

Can I contest my business rates bill if I think it is too high?

If you think you’re being charged too much for your business rates, there’s a process to challenge it. But, you need a good reason beyond just not affording to pay.

First, check similar properties in your area, you can do that here. This tool is also useful if you want to dispute your assessment value. Keep in mind, if the property next to yours has a lower rateable value, it doesn’t necessarily mean your assessment is wrong. There could be reasons like that property being smaller or having fewer parking spaces. However, if you know the properties are exactly the same, you might be able to successfully challenge for a reduction.

 

I’m struggling to pay my business rates – is there any help available?

There are several business rate relief schemes that could reduce the amount you have to pay if you qualify for them.

Firstly, there’s the small business rates relief programme. This means properties with a rateable value below £12,000 won’t have to pay any business rates. Properties with a value between £12,000 and £15,000 get tapered relief.

Additional measures were introduced in the 2018 Budget. Businesses with a rateable value under £51,000 will see their business rates bill cut by a third for the next two years, which could save some businesses over £8,000. Businesses already getting tapered relief from the small business rates scheme can benefit from this extra relief too. This is expected to apply to 90% of shops, restaurants, cafes, and bars, giving a much-needed financial boost to this struggling sector.

There are also other specific relief schemes for certain sectors, like rural rate relief and charitable rate relief for charities and amateur sports clubs.

 

What happens if I do not pay my business rates?

Local councils handle business rates and can take various actions if companies don’t pay on time. Here’s how it usually goes:

  • Reminder letter – They’ll start by sending you a reminder letter, giving you about a week to catch up on payments. If you don’t, they might ask for the whole amount immediately, losing the option to pay in instalments.
  • Summons issued – Ignoring the reminder means you might get a summons, telling you about the council’s plan to get a liability order through a court hearing. This is when extra costs, like court fees, get added to what you owe.
  • Liability order – If you don’t pay by the hearing date, they’ll apply for a liability order. This gives councils more power to collect the debt.
  • Bailiffs ordered – After a liability order, bailiffs can be told to come to your business and collect what you owe. You’ll also be charged for the bailiffs’ fees.
  • Insolvency proceedings – If bailiffs can’t get the money, the council might start insolvency proceedings against your company. This could lead to your business being shut down if it’s a limited company or you being bankrupt if you’re a sole trader.


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What options are there if I cannot afford to pay my business rates?

If you’re struggling to pay your business rates, the first thing to do is get in touch with your council. If you let them know before you miss a payment, you have a better chance of working out a plan with them. This could mean delaying a payment or paying what you owe in smaller, more manageable instalments. 

If your money troubles are serious and might affect your ability to pay business rates in the future, it’s wise to get advice from an insolvency practitioner. They can talk you through different options for you and your business, including:

  • Financing – Bringing in new funds to the business might help improve your cash flow and let you meet your financial commitments.
  • Company Voluntary Arrangement (CVA) – This is a formal process when your company is in financial trouble. It lets you talk to creditors and reorganize your debts.
  • Creditors’ Voluntary Liquidation (CVL) – If your business can’t go on, you might choose to close it yourself. This is called Creditors’ Voluntary Liquidation, and it’s when a director decides to close their insolvent business.


Vanguard Insolvency has offices all over the country, helping company directors deal with tough times. With over 100 licensed insolvency practitioners, we’re well-equipped to assist whether you’re struggling with business rates, HMRC, or any other creditor. Get in touch today for a consultation with no obligations. 

Senior Partner at Vanguard Insolvency Practitioners | Website | + posts

I am an insolvency professional with a distinguished career specialising in commercial insolvency, adeptly navigating Creditors Voluntary Liquidation, Company Voluntary Arrangements, and Company Administrations. With a comprehensive understanding of insolvency laws and an unwavering commitment to ethical practices.