If you run your own business you’ll be aware that it is a legal requirement to pay UK Business rates, but if you’re new to business, it might be surprising to learn that business rates do not include services like waste collection.
Here we take a look at business rates, and why waste management services aren’t included in them.
What are UK business rates?
Business rates are a tax on any property that is used for business purposes, this can be an office, a factory, shop or even a home if you operate a business from the premises.
The rates are currently calculated based on a property’s rateable value (the estimated open market value of the build, or proportion of the building that is being used for business use.) However, a business will not pay business rates on a property with a rateable value of £12,000 or less. If the properties rateable value is less than £150,000 the rate of relief will go down gradually from 100% to 0%. For example, rateable value is £13,500, you’ll get 50% off your bill. If your rateable value is £14,000, you’ll get 33% off.
These values are usually reviewed every five years and take into account the size of the property and its usage. Factories and shop floors may have a higher rateable value than stock rooms, for example. However, on the 12th June 2019, the Government introduced new legislation that (if Parliament passes) will mean that revaluations will occur every three years with the next revaluation taking effect from April 2021.
There are a number of businesses who may have reduced rates, and reason’s why a small business may benefit from reduced rates, these include:
- Small business rate relief
- Rural rate relief
- Charitable rate relief
- Enterprise zones
- Empty buildings relief
- Hardship relief
- And, Transitional relief.
The history of business tax
UK business tax can be traced back as far as the Elizabethan times, and the introduction of The Poor Law of 1572, and later The Poor Law of 1601. Initially, it was formed to fund local services, but the law has had more than a few facelifts since.
Where does the money go?
While it may seem like business rates are the commercial equivalent of your local council tax, this isn’t the case. Residential council tax is the main source of income for most local councils. It boosts the money given by the central government, and it is up to individual councils to decide where the money is spent. In comparison only approximately 40% of money gained from the UK business tax is retained by the local government for local services, the rest is paid by councils to the central government, which uses the income to fund grants to local authorities.
What does your business get in return for paying your business rates?
As the money collected from business rates goes mostly towards the central government, there is no one item or service that can be related back to the business tax paid.
The funds do go somewhat to funding the following community services, which may benefit businesses in general, but they do not fund services specifically used by businesses.
- Road maintenance, repairs and street lighting
- Local transport services like buses
- Children’s social care
- Support for elderly and vulnerable
- Supporting children’s education
- Preventing homelessness through social housing
- Libraries, arts, museums, leisure and recreation services
- Maintaining parks and open spaces
- Street cleaning and flood defences
- Administration of licenses, permits and housing benefit
- Planning and building control
- Other services like coroners, courts, registrars, elections and tax collection
- Long term investment
Business waste and business rates
Business waste collection costs are NOT included in business rates. The main reasons for this are as previously discussed business rates are calculated using the rateable value of the business premises and have nothing to do with waste. Given that different types of businesses produce different types and amounts of waste, it would not be practical or fair to include waste collection and disposal in the business rates.
For example, a small retail unit could potentially pay the same amount of business tax as a small bar which serves food and drink. The retail unit may only produce small amounts of waste which would include general waste and packing material. The small bar would produce a lot more waste such as food waste, glass waste, and general waste. Therefore, it would unfair for either the retailer to pay more for services they aren’t using or for the pub to essentially get services at a discounted rate just because their properties are of a similar size/value.
Businesses instead must arrange the collection or disposal of waste through many registered waste carriers, depending on what is best for their business.
CheaperWaste offer businesses a number of tailored waste collection services based on their needs, and at a competitive price.
Contact us today for a quote.