Business Rates

Alex ThompsonClub Management & Governance Manager

RFU Business Rates Update Report

• Structure of the Tax• What is rateable?• How is it valued?• Calculation of rates liability• Rates reliefs• Coventry, Solihull & Warwickshire snap shot picture• 2017 Rating Revaluation

‒ What will happen?‒ Timeline

• Actions for clubs

Business Rates - structure of the tax

• Structure of the tax – England

• Assessments (Rateable Values) are set by the Valuation Office Agency – part of HMRC

• The tax rate (Uniform Business Rate multiplier) is set by the Department of Communities and Local Government (DCLG)

• Which is also responsible for rates reliefs

• The tax is collected by local authorities throughout England – more than 300 of them

• Was all paid on to HM Treasury – but since 2013 local authorities keep 50% of “new” rates income

Business Rates – What is rateable?

• All non-domestic property is rateable unless specifically exempt (e.g. agricultural land and buildings)

• Domestic property is subject to Council Tax

• Non-domestic property includes land and buildings

• Land will include pitches and car parking

• Buildings will include clubhouses, changing rooms, groundsmens’ stores

• Improvements or alterations made by the occupier are rateable

• As is specified plant and machinery

Business Rates – basis of valuation

• Rateable values are revised every 5 years

• The last revaluation was from 1st April 2010

• And is based on rental values at 1st April 2008

• Rateable Values are set by the Valuation Office Agency (VOA)

• And are available on the VOA website at: www.2010.voa.gov.uk/rli

• The next revaluation will be from 1st April 2017

• And will be based on values at 1st April 2015

Business Rates – calculation of liability

• RV x Multiplier gives rate liability, but:

‒ Transitional adjustments may apply

‒ Small Business Rate Relief can also apply

‒ Along with a supplement to pay for the relief

‒ A supplementary rate (to fund Crossrail) may apply in the Greater London Authority area

‒ Business Improvement District (BID’s) levies may apply

‒ So RV x Multiplier may not give the liability!

• Current (2014/15) multiplier is 47.1 p with a supplement of 1.1p for properties with an RV £18,000 or more (RV £25,500 or more in London)

Business Rates – rates reliefs

• A very complicated area of law and practice

• There are at least 17 different business rates exemptions (unfortunately unlikely to apply to clubs)

• And at least 8 different business rates reliefs schemes

• Three of these are significant for RFU clubs

‒ Community Amateur Sports Clubs (CASC’s) relief

‒ Charitable rate relief

‒ Small Business Rate Relief

• Plus the possibility of discretionary rate relief granted by the Billing Authority

Business Rates – Small Business Rate Relief

• Small Business Rate Relief is a mandatory rate relief on a sliding scale

• To qualify for the relief the ratepayer must

‒ Either occupy only one property with RV under £12,000

‒ Or occupy a main property with RV under £12,000 and all other properties under RV £2,600 with total RV under £18,000 (£25,500 in London)

• If these conditions are satisfied the relief is currently 100% for RV under £6,000

• And on a sliding scale to 0% relief at RV £12,000

• A very valuable relief for smaller clubs

Coventry, Solihull & Warwickshire

Highest 2010 Rateable Value

Broadstreet RFCSilhillians RFCRugby Lions RFCBarkers Butts RFC

45,75035,00034,50034,250

1151.7 m21069.0 m21298.6 m21058.4 m2

Lowest2010 Rateable Value

Claverdon RFCBerkswell & Balsall RFCCoventry Welsh RFCWarwickian RFC

6,5006,9007,0007,400

216.1 m2358.8 m2339.3 m2248.9 m2

Coventry, Solihull & Warwickshire

2010 Rateable Value - Mean average CSW Clubs = 15,317 – 515 m2

15,317 x multiplier (standard rate = 0.471) = £7,214.31

SRA 2013 Clubs Survey Rugby Results• Average annual expenditure = £124,743, therefore business

rates = 5.8% of annual expenditure (without any reliefs)

• Generating sufficient income is the top challenge faced by rugby clubs (73%).

Discretionary Rate Relief - CSW

STILL TO REVIEW

North Warwickshire Borough CouncilStratford District CouncilSolihull Metropolitan Borough Council

DRR – Possible 100%

Rugby Borough Council

Only offer potential 20% DRR to CASC or charities

Discretionary Rate Relief - CSW

REVIEWED

Nuneaton & Bedworth Borough Council

Previously DRR – Possible 100%New DRR – Possible 50% - more stringent criteriaPossible further 10% DRR to CASC or charity

Nuneaton RFC = 50% DRR = £4,458 bill

Coventry City Council Previously DRR – Possible 100%New DRR in 2015 – Possible 100% - more stringent criteria

Warwick District Council Previously DRR – Possible 100%New DRR – Possible 100% - more stringent criteria

Coventry City Council – DRR Policy

• 2 sets of audited accounts = conduct a financial assessment.

• Applications annually;

Must demonstrate that it supports the Council’s objectives of attracting business, growth and jobs to the city

or That it is a community group or an advice organisation providing

advice or support to the most vulnerable residents;

Warwick District Council – DRR Policy

• 3 sets of accounts = conduct a financial assessment (key factor – 53% weighting).

• Applications annually;• Importance of the organisation to the local community test.• Youth Development Policy & Equalities Policy • Provide their facilities free of charge or at reduced rates for:

• Use by disabled people or special interest groups, • Provide coaching/workshops/training

Kenilworth RFC previously DRR = 100% = £6,065- New DDR Policy granted 20%, two x appeals = 50%

= increase bill of £3,032.50

Business Rates

• Significant cost to rugby clubs.

• Every Local Authority is different – no consistent approach across the country.

• Local Authority cuts = Reviewing DRR Policies = increased bills for rugby clubs.

Business Rates – 2017 Rating Revaluation

• New Rateable Values from 1 April 2017

• Will be based on rental values at 1 April 2015

• The Valuation Office Agency will not publish the new RV’s until October 2016

• In the meantime clubs may receive a “Notice Requiring Return of Information” from the VOA

• There are fines for failing to return these

• There will be difficulty in budgeting for rates beyond April 2017

• And a need to investigate new Rateable Values when these are published

Business Rates – 2017 Rating Revaluation

• Notices requiring return of information

‒ A legal requirement to complete and return these within 56 days

‒ And a civil penalty for failing to comply

‒ This information could affect the future rateable value so the forms should be completed carefully

• Budgets for rates from April 2017

‒ Remember that RV’s will change from 1 April 2017

‒ And a new UBR multiplier will be set

‒ Big changes in rates liability are likely to be phased in

‒ Property improvements are subject to rates so clubs should budget for this

Business Rates – 2017 Rating Revaluation

• New rateable values published October 2016 on the VOA website www.2010.voa.gov.uk/rli

Business Rates – 2017 Rating Revaluation

• Search by postcode

Business Rates – 2017 Rating Revaluation

• Look at valuation

Business Rates – 2017 Rating Revaluation

• Compare with others

Business Rates – Appeals against values

• In England appeals can be made any time after the new valuations come into force (1st April 2017) and up to the end of the Rating List (31st March 2022)

• But only one appeal can be made “per event”

• Appeals can backdate to 1st April 2017 or to the relevant date if later

• As well as making appeals against Revaluation assessments, ratepayers can make appeals if the VO alters an assessment of is there is a “material change of circumstance” (MCC)

Business Rates – Actions for Clubs

• Rateable Values will change from 1st April 2017 – clubs should be aware of this

• Notices Requiring Return of Information will be issued – complete these promptly and carefully

• In the meantime check what reliefs may be available

• Mandatory reliefs available for CASC’s, Charities, and small businesses

• Discretionary reliefs under pressure

• New Rateable Values published in October 2016

• Use the VOA website to check and compare before appealing