Business rates are a tax on non-residential properties in the UK that help fund local services such as police, fire, and waste collection. The amount a business pays in rates is based on the rateable value of the property, which is set by the government’s Valuation Office Agency (VOA). However, when it comes to listed buildings, the rules around business rates can be more complex.
Listed buildings are properties that have been deemed to have special architectural or historic interest and are therefore protected from alterations or demolition. There are three grades of listing – Grade I, Grade II*, and Grade II – with Grade I being the highest level of protection. While owning a listed building can come with many advantages, such as prestige and potential resale value, it also comes with its own set of challenges, including the impact on business rates.
Listed buildings are often subject to higher business rates compared to non-listed properties. This is because the rateable value of a listed building is calculated based on their existing use, rather than their potential rental value. This means that if a listed building is being used for a commercial purpose, such as a shop or office, the rateable value will be higher compared to a similar non-listed property in the same location.
One of the reasons listed buildings are subject to higher business rates is the cost of maintaining and preserving their historic features. Owners of listed buildings are required to adhere to strict guidelines set out by Historic England, including using traditional materials and techniques for repairs and renovations. This can be more costly and time-consuming compared to modern construction methods, which in turn can impact the rateable value of the property.
Another factor that can affect business rates on listed buildings is any changes or additions made to the property. While alterations are allowed on listed buildings, they must be carried out in a sympathetic manner that preserves the building’s historic character. If a listed building undergoes extensive renovations or changes that are not in keeping with its listed status, the rateable value can increase as a result.
Furthermore, the location of a listed building can also impact the business rates. Properties in prime locations, such as city centers or affluent neighborhoods, are likely to have higher rateable values compared to those in less desirable areas. This is because businesses in sought-after locations tend to generate more revenue, which is reflected in their business rates.
Despite the higher business rates associated with listed buildings, there are some exemptions and reliefs available to help alleviate the financial burden on owners. For example, properties with a rateable value of less than £12,000 are eligible for small business rate relief, which can significantly reduce the amount of business rates owed. Listed buildings that are used for charitable purposes or are vacant may also qualify for relief or exemptions.
In conclusion, while owning a listed building can be a rewarding experience, it is important for owners to understand the implications on business rates. The higher rateable values and additional costs associated with maintaining and preserving listed buildings can have a significant impact on a business’s bottom line. However, by taking advantage of available reliefs and exemptions, owners of listed buildings can help mitigate some of the financial challenges they may face.