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Non-Domestic Rates, or Business Rates, collected by local authorities are the way that those who occupy non-domestic property contribute towards the cost of local services. Except in the City of London where special arrangements apply, the rates are pooled by central government and redistributed to local authorities according to the number of people living in the area. The money, together with revenue from council tax payers, revenue support grant provided by the Government and certain other sums, is used to pay for the services provided by your local authority and other local authorities in your area.
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Apart from properties that are exempt from Business Rates, each non-domestic property has a rateable value which is normally set by the valuation officers of the Valuation Office Agency (VOA), an agency of the Inland Revenue. It draws up and maintains a full list of all rateable values, available on their website at www.voa.gov.uk.
The rateable value of your property is shown on the front of your bill. This broadly represents the yearly rent the property could have been let for on the open market on a particular date. For the revaluation that came into effect on 1st April 2005, this date was set as 1st April 2003.
The valuation officer may alter the value if the circumstances of the property have changed. The ratepayer (and certain others who have an interest in the property) can also appeal against the value shown in the list if they believe it is wrong. Further information about making appeals can be found on the VOA website or from your local valuation office.
Successful appeals against values shown in the rating list that came into force on 1st April 2005 will normally be backdated to that date, although there are exceptions to this. Further information about these arrangements may be found on the VOA website.
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The local authority works out the Business Rates bill by multiplying the rateable value of the property by the appropriate multiplier. From 1st April 2005 there are two multipliers; the standard non-domestic rating multiplier and the small business non-domestic rating multiplier. The former is higher to pay for small business rate relief. The Government sets the multipliers for each financial year for the whole of England. The Government normally changes both multipliers every year in line with inflation. By law, the multipliers cannot go up by more than the rate of inflation apart from some minor adjustments to counteract losses from appeals and, in relation to the standard multiplier, to pay for small business rate relief. In the year of a revaluation it is set at a level which will keep the total amount raised in rates after the revaluation the same as before, plus inflation for that year. The current multipliers are shown on the front of your bill.
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Property values normally change a good deal between each revaluation. Transitional arrangements help to phase in the effects of these changes by limiting increases in bills. To help pay for the limits on increases in bills, there also have to be limits on reductions in bills. Under the transition scheme, limits continue to apply to yearly increases and decreases until the full amount is due (rateable value times the appropriate multiplier).
The scheme applies only to the bill based on a property at the time of the revaluation. If there are any changes to the property after 1st April 2005, transitional arrangements will not normally apply to the part of a bill that relates to any increase in rateable value due to those changes. Any transitional adjustments are shown on the front of this bill.
Further information about transitional arrangements and other reliefs may be obtained by contacting us or by visiting www.businesslink.gov.uk.
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Business Rates will not be payable in the first three months that a property is empty. After this period, empty rate is charged at 50% of the bill that would have been due had the property been occupied. There are a number of exemptions from the empty rate (eg. industrial properties and listed buildings and small properties with rateable values of less than £2,200). Full details can be obtained from the local authority.
The Government has recently reformed empty property relief in order to provide an incentive to bring empty business properties back into use. This reform has been introduced by the Government to help increase the supply of premises available to let, thus reducing business rents and improving competitiveness.
At present the Government are still in consultation and, therefore, are yet to issue the final legislation. However, indications are that from the 1st April 2008, most properties that have been empty for more than 3 months (or in the case of an industrial property, more than 6 months) will no longer receive any relief from Business Rates.
After the initial 3 month (or 6 months for industrial properties) rate free period expires, empty properties will be liable to pay 100% of the Business Rates, unless one of the remaining exemptions applies (for example properties that have a rateable value under £2200 or properties where occupation is prohibited by law).
If your property is incapable of ’beneficial occupation’ – for instance if it is in very poor condition and cannot be economically repaired, the Valuation Office may be in a position to remove it from the rating list. This can only be requested from 1st April 2008.
Confirmation of the exact legislation is due to be published in November 2007. Shortly after this the Council will be writing to all those ratepayers who will be affected by the change in regulations.
Further information on the proposed changes can be found on the Valuation Office website.
If you have any queries or would like to discuss the proposed changes please contact our Revenue Services.
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A ratepayer is liable for the full non-domestic rate whether a property is wholly occupied or only partly occupied. Where a property is partly occupied for a short time, the local authority has discretion to award relief in respect of the unoccupied part. Full details can be obtained from the local authority.
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This relief is only available to ratepayers who apply to their local authority and who occupy either:
The rateable value of the property mentioned in a), or the aggregate rateable value of all properties mentioned in b), must be under £15,000 outside London or £21,500 within London, including on the 1st April each year.
Ratepayers who satisfy these conditions will have the bill for their single or main property calculated using the lower small business non-domestic rating multiplier rather than the ordinary non-domestic rating multiplier that is used to calculate the liability of other businesses.
In addition, if the single or main property is shown on the rating list with a rateable value of up to £10,000, the ratepayer will receive a percentage reduction in their rates bill for this property of up to a maximum of 50% for a property with a rateable value of not more than £5,000.
If an application for relief is granted, provided the ratepayer's circumstances do not change, the application will not need to be renewed until the next revaluation of non-domestic premises, which happens every five years. Certain changes in circumstances will need to be notified to the local authority by the ratepayer (other changes will be picked up by the local authority). The changes which must be notified are:
Notification of these changes must be given to the local authority within 4 weeks of the day after the day the change happened. If this happens, there will be no interruption to the ratepayer's entitlement to the relief. However, failure to notify the authority within this timeframe will mean the ratepayer ceases to be entitled to the relief with effect from the day that the change happened. If they are still eligible, the ratepayer will be entitled to the relief again with effect from the day that they notify the local authority. A notification that the ratepayer has taken up occupation of an additional property must be by way of a fresh application for relief; notice of an increase in rateable value must be given in writing.
Full details on the eligibility criteria and on how to apply for this relief are available from us.
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The local authority has discretion to give relief to Non-Profit Making Organisations. Full details can be obtained from the local authority.
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The local authority has discretion to give relief in special circumstances. Full details can be obtained from the local authority.
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Ratepayers do not have to be represented in discussions about their rateable value or their rates bill. Appeals against rateable values can be made free of charge. However, ratepayers who do wish to be represented should be aware that members of the Royal Institution of Chartered Surveyors (RICS) and the Institute of Revenues Rating and Valuation (IRRV) are qualified and are regulated by rules of professional conduct designed to protect the public from misconduct.
Before you employ a rating adviser, you should check that they have the necessary knowledge and expertise, as well as appropriate indemnity insurance. Take great care and, if necessary, seek further advice before entering into any contract.
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Please note that Non-Domestic Rates are payable on the first of every month.
Details regarding payment methods for your non-domestic rates are shown on your bill.
We recommend Direct Debit as the most convenient and cost effective way of paying your non-domestic rates. You only need sign one instruction to your bank which remains in force until you decide to cancel it. If you wish to join our many customers who already pay their bills this way, simply complete and sign the direct debit form enclosed with your bill and return it to our office.
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For further advice on matters relating to business rates, please contact our Revenue Services section.
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This page last updated: 13/03/2008