farm buildings© FLPA / John Eveson/Rex/Shutterstock

A revaluation of business rates is being conducted, with new rates taking effect from 1 April 2017.

The Valuation Office Agency (VOA) is assessing the open market rental value of properties at 1 April 2015 to determine their rateable value. This is then used by local authorities to calculate business rates.

Rates will increase, but by how much depends on the location of the farm and any business judged chargeable to business rates. 

While farm buildings and agricultural land are exempt from business rates as long as they are being used for agriculture, diversified farm businesses are often subject to business rates.

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Andrew Shirley, chief surveyor at the CLA, said agriculture was tightly defined and that some farmers may find they had bridged the gap from agriculture to business without being aware, making the occupier liable to pay business rates.

Business rates are charged based on the maximum earning capacity of the business.

This applies even for a start-up business or if the business is non-profitable, so business rates should be included in a business plan, said Mr Shirley.

It is assumed that any tenant is the occupier but it was a good idea to write in any lease, especially of six months or shorter, that the tenant is liable to pay business rates should they be charged, he advised.

He also said the size of the property occupied by the business varies the rateable value.

If a farm building is being shared by a farmer and a tenant, the business area should be clearly defined otherwise the rateable value will be calculated on the whole building.

Rateable values are reassessed every five years, with the last revaluation taking place in 2010.

The revaluation figures will be published at from 30 September 2016.

It is advised that business owners check the information used to calculate their new rate and compare it with other farms and similar businesses in their area. Revaluation figures can be appealed with VOA if justified.