How business rates are calculated.

Premises that are subject to business rates are given a rateable value by the Valuation Office Agency (VOA). Local authorities use the VOA's assessment of a property's rateable value to calculate business rates bills. The rateable value is based on the likely annual open market rent for the premises at a particular date.

Rateable values are reviewed every five years - this is called a revaluation. They were last updated in Great Britain on 1 April 2005, based on market rents at 1 April 2003. Properties that have been changed since the last revaluation (eg extended) can be reassessed.

The VOA is currently working on the new rateable values which will become effective in Great Britain on 1 April 2010, based on market rents at 1 April 2008.

To assess the rateable value, factors such as the size of the premises and how they are used are taken into account. Different parts of the premises may be valued at different levels. For example, the front part of a shop, nearest the entrance, is more valuable than space further back or storage space in the basement.

Details of the rateable value, and how it has been calculated, are shown on a summary valuation for the property. 

The business rates you are charged are calculated using the rateable value and the multiplier set by the government. To calculate business rates, the rateable value is factored with the multiplier , eg if the multiplier is 46.2 pence, then for every pound of rateable value, 46.2 pence is liable in business rates. Note that the rateable value is given in pounds while the multiplier is given in pence.

In Northern Ireland, Land and Property Services (Rating Service) works out your rates by multiplying the rateable value by the Regional Rate + District Council Rate (the poundage).

In England , the standard multiplier for 2008/09 is 46.2 . For example, a property with a rateable value of £10,000 is normally charged £ 4,620 , excluding any discounts or reductions that may be applicable.

How your property is valued for business rates.

The VOA gives all business and non-domestic property in England and Wales a rateable value. Rateable value is a professional assessment of the annual rental value of a property on a specific date.

The VOA uses a wide range of property information and rental evidence, and studies the rental market in depth to ensure that valuations are accurate and consistent, reflecting the individual characteristics of each property.

For most properties, such as shops, offices, warehouses and other industrial property, evidence of actual rents being paid for similar properties in the area is used to assess rateable values.

For other types of property, such as pubs and other licensed premises, reference is often made to the business receipts being achieved to gauge the level of ‘fair maintainable trade’ that might be expected, using this as the basis for the assessment of rateable value.

For specialist property like courts, neither of these methods is appropriate, so building and land costs form the basis for the assessment of rateable value.

Below are some of the common issues that can affect rateable values.

Internal factors

The zones used are not fair - my shop is an unusual shape

There is more in the valuation than actually exists

My property is in a poor state of repair

This property is now more than one property

The property is now derelict

The property is now vacant

Part of the property is now exempt from rating

The property is now used for domestic purposes

There is major refurbishment work going on

We only occupy part of what we are being charged for

The property has been changed - it is now occupied differently

There is a different occupier in the property

The measurements of my property are wrong

External factors

The economic downturn (credit crunch) has caused a reduction in my trade

The area has deteriorated over time

There is a new development in the area

Others

There's a restriction in my lease so the property can only be used for a specific trade

The property is different to the description used

The effective date of the rateable value is wrong

The address that is being used is wrong