Local Taxation - Working at Home 2 - Part of Dwelling Exclusive for Business or Not...?

This post follows No1 on this Blog.

If you are starting a new business or you are joining the growing horde of employees who work from home you may find yourself with demand for business rates which is in addition to your council tax demand!

There are a number of pointers which indicate whether part of a dwelling would become liable for assessment for business rates. The following pointers are offered:

1. if from time to time work is carried out on say, the kitchen table or in some other family-used place it should not attract an assessment for business rates;
2. similarly, if the work is essentially carried out at a desk used for the purpose in say, a reception room or bedroom and the room is used as part of the home by other members of the household, it should not attract an assessment for business rates; 
3. On the other hand, be warned, if a room, garden room, garage, shed or other accommodation is set aside and exclusively used for work purposes, it is possible that the question of an assessment for business rates will arise.

The main issues underpinning the last pointer are: 1) the degree of exclusivity of use in part of the dwelling, and  2) the nature of the work. For instance, use of the room by other members may exist from time to time but it may be insignificant. Although exemptions and reliefs from business rates are ignored in this series on Working at Home, where an exemption etc from business rates is available it may affect the outcome.

Local Taxation - Working from Home No 1 - Council Tax, Business Rates or Both

An intention to start working from a family home will involve a review of the impact of local taxation on the family budget and business budget. Briefly the points to note are as follows:

1. A dwelling which is used exclusively for residential purposes will normally result in the occupier paying council tax.
2. A dwelling which is used partly but minimally for business purposes would normally result in the occupier paying only council tax. (The issue to be considered is the extent and degree of business use.)
3. A dwelling which is used partly but significantly for business purposes would normally result in the occupier paying council tax and business rates. (The same issue of the extent and degree of business use needs to be considered.) 

The next two posts of  this series on Working at Home will examine the range of possibilities under 2 and 3 above. (Please note: In these posts the issue of the availability of exemptions and reliefs from local taxes is ignored.)


Finally, in local taxation law and practice for council tax and business rates  property may be known as a composite property. It will be a property which part residential and part business, eg a shop with  flat above, and an office premises incorporating a flat. Our three posts will deal with dwellings - houses and flats - at least initially.

Business Rates No 1 - Supplement

Although little used (so far at least) the business rates supplement (BRS) is a local tax add-on which in our straightened circumstances could possibly become popular with some higher tier local authorities.

BRS is a local tax which must be used for economic development purposes. It may be imposed under the Business Rates Supplements Act 2009 (subject to power of rejection (s 24) by the appropriate national authority). (See http://www.legislation.gov.uk/ukpga/2009/7/section/11 )

BRS is imposed on non-exempt no-domestic properties, ie those with rateable values (RVs) over £50,000. Exemptions (s 11(3)) and relief (s 15) apply under the 2009 Act to the BRS and there is provision (s 16 and sch 2) for an interaction with any levy under a Business Improvement District scheme (BID).

The one example (in London) is the Greater London Authority's BRS of 2p which contributes funds for Crossrail.   It is imposed on non-domestic properties with rateable values over £55,000 - as shown in the valuation list of April 2010. (See  http://www.london.gov.uk/crossrail-brs )

If BRS does take-off in a big way a change in the ratepayers' "say" is on the cards. At present ratepayers are able to vote on the proposals for a supplement if their a contribution will be greater than a third of the cost: this is about to change if the Localism Bill (cl 38) goes through. In future all proposals will require the consent of the majority of the ratepayers.