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Discover how installing a mezzanine floor could affect the rateable value of your business property with our comprehensive guide for UK business owners.
Understanding how mezzanine floors influence business rates is a common concern for our clients at Doity Engineering. A quick online search can often lead to more confusion than clarity, so in this blog, we'll break down the key factors that determine whether and how a mezzanine might impact your business rates. Whether you're considering adding a mezzanine or simply exploring the potential implications, we've gathered all the essential information you need to make informed decisions.
Understanding Mezzanine Floors
First, let's define what a mezzanine floor is.
A mezzanine is an intermediate level within a building that is partially open to the floor below and does not cover the entire space. These structures are highly versatile, providing additional storage, office space, retail displays, manufacturing areas, or leisure facilities. Mezzanines allow businesses to optimise their available vertical space without the need for costly and extensive renovations.
An Overview of Business Rates
Business rates are a tax applied to commercial properties in the UK. They are calculated based on the property's rateable value, which reflects its estimated open market rental value. Several factors influence business rates, including the property's size, location, and usage. Larger premises, prime locations, and specific business uses such as retail or office space generally result in higher rateable values and, consequently, increased business rates.
As we'll explore below, installing a mezzanine floor can affect your business rates, but the actual impact is often less significant than many business owners expect.
Factors Influencing Business Rates for Mezzanine Floors
The rateable value of your business property may be affected by two primary factors when installing a mezzanine: size and usage.
• Size: Business rates are calculated per square metre, so adding a mezzanine increases your total floor area. However, the extent to which this affects your rates depends on the size of the mezzanine relative to the entire property.
• Usage: The purpose of the mezzanine plays a crucial role in determining how much your rateable value changes:
• Storage Use: If the mezzanine is used solely for storage, it typically attracts a lower rateable value.
• Office or Retail Use: Mezzanines used as office space or for customer-facing activities usually lead to a higher rateable value.
These factors are considered during the valuation process to ensure your business rates accurately reflect the mezzanine's contribution to your property's overall function.
When Does a Mezzanine Floor Not Affect Business Rates?
While mezzanine floors are generally rateable, there are certain exceptions. For instance, if your existing ground floor space is rated at £100 per square metre within a large industrial unit, this valuation assumes a variety of potential uses, including high bay racking. If a mezzanine is then installed, the usability of the ground floor beneath it may be reduced, potentially lowering its rateable value to £50 per square metre.
Similarly, the mezzanine itself may be subject to restrictions, such as load-bearing limitations preventing the placement of heavy machinery. As a result, the mezzanine's rateable value may also be assessed at £50 per square metre, meaning the overall business rates bill remains unchanged.
At Doity Engineering, we often recommend that businesses consider submitting a rates appeal after installing a mezzanine. This can be handled either internally or with the help of a specialist. A business rates appeal allows property owners to challenge their rateable value if they believe it has been incorrectly assessed, potentially reducing their overall business rates liability.
Speak to an Expert
UK business rates can be complex, but at Doity Engineering, our team has decades of experience in planning, designing, and installing mezzanine floors across a range of sectors, including manufacturing, hospitality, retail, and education. This expertise gives us unparalleled insight into how business rates are impacted by mezzanine installations.
Whether you're in the early planning stages of a mezzanine project or seeking advice on the business rates implications of an existing structure, our experts are here to help. Get in touch today, and we'll be happy to guide you through the process.
