Non-domestic rates are a means by which businesses and other occupiers of non-domestic property indirectly contribute towards the costs of the services provided by local authorities.
The follwing information provides an introduction to some of the issues that may affect you if you occupy non-domestic (business) premises. This includes properties occupied by organisations who do not operate in order to make a profit. The income from all non-domestic rates is paid into a national pool and redistributed between local authorities in proportion to their adult population. Domestic properties are subject to council tax.
There are four key organisations involved in local government finance and each has a separate responsibility. These are:
Communities and Local Government (CLG) / Welsh Assembly Government : responsible for setting the overall government policy on local taxation
Valuation Office Agency : an executive agency of HM Revenue & Customs responsible for assessing rateable values that are the basis for working out rates bills
Valuation Tribunal Service : an independent, judicial body that has the power to deal with appeals relating to non-domestic rating (and council tax).
Local (billing) Authorities : who are responsible for working out your rates bill, giving any reliefs that may be due and for collecting the money.
Rates are normally payable by the occupiers of business premises. These will usually be either the owner if he/she is the occupier of the property or the leaseholder.
If a property is empty, the owner or leaseholder will usually still pay rates after a period of exemption has elapsed. The period of exemption covers the first three months that the property is empty. For warehouses and industrial property, the exemption period is extended to six months.
Apart from those properties which are exempt from rates, each non-domestic property has a rateable value. The rateable value broadly represents the annual rent the property could have been let for on the open market on a particular date, on full repairing and insuring terms. For the current rating list, this date was set as 1 April 2003.
The rateable value is the VOA assessment of rental value on a fixed valuation date and subject to certain valuation assumptions laid down by Parliament. It may be different from the rent you actually pay for a number of reasons, for example your own rent was agreed at a different time.
The valuation date is fixed so that all properties are valued at the same point in time. This helps to ensure fairness for everyone.
No. Rateable values are a key factor in the calculation of business rates but they are not the rates bill. Local authorities are responsible for calculating actual rates bills and for collecting rates and will use the rateable value in working out how much you have to pay. The local authority will apply the multiplier, (a rate in the pound) to the rateable value and then deduct any reliefs that are applicable. In England the multiplier is set by the Communities and Local Government and in Wales the multiplier is set by the Welsh Assembly Government . In simple terms your rates bill is worked out as follows: (rateable value x multiplier) less any reliefs = rates bill.
The business multiplier for 2009/2010 is:
England - 48.5p in the pound
Small businesses in England* - 48.1p in the pound
All businesses in Wales – 48.9p in the pound
(*For England a small business = is one where the total rateable value is under £15,000 [under £21,500 in London.] Some businesses may be eligible for small business relief, which can affect the amount of rates that you pay.)
Example:
A property with a rateable value of £22,000 would be:
£22,000 x 0.485 = £10,670 less any reliefs that are applicable
In Wales this would be £22,000 x 0.489 = £10,758 less any reliefs that are applicable .
The local authority will also work out any transitional adjustment. The transitional adjustment limits the amount by which your rates bill changes following a revaluation. There is no transitional relief in Wales
I am interested in moving to new premises - can I find out what the rates bill is likely to be before I move in?
You can find out the rateable value of any business premises in a local authority area from the VOA's rating list. This is a public document and can also be viewed in the VOA offices, local authority offices and libraries. The property you intend to occupy may be in receipt of transitional or other reliefs. You can establish your rate liability by contacting the finance department of the local authority or by asking your solicitor to make enquiries.
If the property you are going to occupy is still under construction or is newly built it may not have been assessed yet for rating purposes and there will be no entry in the rating list. You can write to your local Valuation Office and request an estimate of the rateable value. You should give details of the address, the type of property, the internal measurements and any information concerning the rent which you have agreed to pay. The Valuation Officer will then endeavour to provide you with an estimate. Alternatively, you may wish to consult an independent adviser.
You may be liable to business rates on the proportion of your property used for business purposes.
You can make an appeal against your rateable value once you become the owner or occupier of the premises - this is known as making a ‘proposal’ to alter the rating list.’ You can obtain a proposal form from your local Valuation Office or you can make an appeal online either yourself or via an agent. If you decide to make a proposal the VOA will write to you or your agent to tell you when the VOA expect to begin discussions about your appeal. If the VOA cannot agree the matter between you or your agent your appeal can be heard by an independent Valuation Tribunal.
It is important to note that you have to pay rates on the basis of the rateable value shown in the rating list even if you have appealed against it.
