Farmers and business tenants occupying converted farm buildings are set for a substantial rise in Business Rates unless action is taken to switch from one Government Business Rate relief scheme to another.

Farmers who use, or rent out, such buildings need to be aware of the changes and should put themselves in a position to advise their tenants on what changes are required to maintain their relief, advises James Attrill, Rural Business Consultant of Strutt & Parker.

The change arises because the Agricultural Business Rate Relief scheme for businesses occupying buildings previously used for agricultural purposes finished in August. This 50% subsidy on businesses with a rateable value of below £7000 was made available by the Government to assist farm diversification and small business growth by making it more attractive for businesses to occupy such buildings. Some local authorities made it even more attractive by increasing the subsidy to 100%. The ending of the scheme means those businesses are set for substantial increases if they don’t switch to another rate relief scheme – the Small Business Rate Relief.

This scheme applies to businesses with rateable values of below £5000, and starts with an identical 50% relief. But this decreases on a sliding scale by an estimated 1% for every £100 of rateable value between £5000 and £10,000. It applies to people with one property or multiple ones, but rules and limits apply.

“We have a lot of farming clients with tenants who were attracted to the buildings because of the Business Rate Relief,” says Attrill. “Substantial rate rises would be a blow to them and I can see a situation where some tenants may use the rises as a reason to vacate their units. If a farmer is aware of what new options tenants have to mitigate the rises he stands a better chance of keeping them,” he adds.

Farmers and tenants will have to inform their local authorities through a formal application for the alternative scheme, but that will not involve any more paperwork as a similar procedure was involved beforehand.

Attrill concludes “farmers and tenants should to get to grips with the mechanisms for setting business rateable values. In some cases it may be worth appealing against the rateable values that are set. Different premises may have different values set for them depending on size, facilities, number of floors and so forth. Landlords and Tenants should be aware of what similar properties are paying to ensure they are not being overcharged.”