How do mezzanine floors affect UK business rates?
Lean how mezzanine floor installations impact the rateable value of your business property with our easy guide for UK business owners.
Understanding how mezzanine floors affect business rates is one of the main topics that our clients ask us about at Doity Engineering. A quick internet search can leave you with more questions than answers, so in this blog we’ll delve into the factors that determine if and how a mezzanine will impact your business rates, providing you with the insights needed to make informed decisions about your property. Whether you’re considering installing a mezzanine or simply curious about the implications, we’ve pulled together all the need-to-know information.
Understanding Mezzanine Floors
Firstly, let’s clarify what constitutes a mezzanine floor.
A mezzanine floor is an intermediate level within a building. It is partly open to the floor below and doesn’t cover the entire floorspace. Mezzanine floors are versatile and can be used for various purposes, such as additional storage, office space, retail displays, manufacturing and leisure facilities. These structures help businesses maximise their vertical space without the need for extensive (and expensive) renovations.
Business Rates Overview
Business rates are a tax on properties used for business purposes in the UK, calculated based on the property’s rateable value, which reflects its open market rental value. Factors influencing business rates include the size of the property, its location and its usage. Larger properties, prime locations and specific uses like retail or office space can lead to higher rateable values and, consequently, higher business rates.
As we’ll explain next, a mezzanine floor usually has some effect on business rates, but the impact can be significantly less than expected.
Factors Affecting Business Rates for Mezzanine Floors
The rateable value of your business property can be influenced by two primary factors when installing a mezzanine: size and use.
- Size: The rateable value is calculated per square metre, so adding a mezzanine increases the property’s total square footage. However, the specific increase depends on the size of the mezzanine relative to the overall property.
- Use: The intended use of the mezzanine plays a significant role in determining how much your rateable value changes. For instance:
- Storage use: A mezzanine used solely for storage typically attracts a lower rateable value.
- Office or retail use: If the mezzanine is used as office space or for customer-facing activities, the rateable value can be considerably higher.
Both factors are assessed during the valuation process, ensuring that your business rates reflect the mezzanine’s actual contribution to the property’s utility.
When does a mezzanine floor not affect business rates
When asked if a mezzanine is rateable, the general answer is yes. However, there are sometimes exceptions to that rule. As a basic example, if your current ground floor is rated at £100 per square metre in a large industrial unit, it assumes a variety of uses including high bay racking. Once a mezzanine is fitted over the area in question the use of the ground floor is then restricted and so may then have a rateable value of £50 per square metre.
The mezzanine floor is then rated but itself has limited use due to its loading capacity, so cannot, for example, hold heavy machinery. Thus its rateable value may be £50 per square metre meaning that the total overall rate bill hasn’t changed..
At Doity Engineering, we sometimes suggest a rates appeal is undertaken once the mezzanine is installed. These can be done by specialists or in-house. A business rates appeal is a process where a business owner can challenge the rateable value assigned to their property if they believe it is incorrect. If approved, this process allows businesses to potentially reduce their business rates.
Speak to an expert
UK business rates are not always straightforward, however our Doity engineers have decades of experience in the planning, design and installation of mezzanine floors for manufacturing, hospitality, retail and in the education sector. This experience gives us an unrivalled knowledge of how business rates are affected by mezzanine floor installations.
Whether you’re in the early planning stages of a mezzanine build or you’re looking for rates advice on your existing mezzanine structure, get in touch today and one of our experts will be on hand to help.
