BUSINESS RATES TERMS EXPLAINED
Non-Domestic Rates (Business Rates) is a property tax based on the estimated rental value of commercial property at or around a specific date.
Appeals
An appeal against a net annual value (NAV) and rateable value (RV) is permitted where the Scottish Assessors Association (SAA) or in England the Valuation Office Agency (VOA) makes a change to the value.
In Scotland, an appeal is also permitted where there is a change of owner, tenant or occupier, or if there is an Error (statutorily defined). In addition, an appeal can be lodged where it can be proved that a particular Material Change of Circumstances has occurred which has an adverse effect on value. There are strict timescales for lodging appeals.
Business rates 'appeals' can be submitted to the relevant Local Authority Finance Department on the basis that the rates bill is incorrect. This may include bills that are incorrectly calculated, notified to the wrong ratepayer or where relief should be applied.
Rateable Value (RV)
The relevant Assessor or VOA will inform the owner and tenant of a property what the rateable value (RV) is at the beginning of a new Revaluation or if there has been a change in the NAV/RV, by issue of a Valuation Notice. The RV is usually based on the area and appropriate rental rate per square metre at the tone date of the property, but exceptions exist (e.g. licensed premises or hotels based on turnover); specialist buildings may be valued on a ‘contractor’s basis’ (cost method).
Rates Bill (Rates Liability)
The rates bill will be issued by the local Council and is usually split into 10 monthly payments, but requests can be made to split this over 12 months. Non-payment of rates may result in full payment being requested as well as fines. The calculation for a bill is: RV x Uniform Business Rate (UBR). Try our Business Rates Calculator for an estimate for your property. Various reliefs may then be applied to calculate the final bill payable.
Rates Mitigation
Mitigating the cost of business rates for unoccupied properties has become vital since the reduction in relief when a property becomes vacant. There are opportunities to mitigate against this liability and there are savings to be made from reviewing alternative uses or charitable occupation of properties where such potential occupiers have a property requirement.
Rating Revaluation
Rating revaluation used to occur every five years but the respective Governments postponed the 2022 Revaluation until 1st April 2023. The reason for regular Revaluations is to reflect market changes in rents throughout the country and in different sectors. Property owners and tenants have a right to appeal the rateable value if they believe it is incorrect, but subject to specific timescales. The next Revaluation in Scotland and England will be in 2023 and three yearly thereafter.
Assessor’s Information Notices (AIN’s)
In Scotland, legislation pertaining to Local Authority AIN’s provides the Assessors with greater powers to obtain information from whom they believe holds the relevant information and is accompanied by extremely punitive and cumulative civil fines for non-compliance within a strict timescale. In England the VOA issue Rental Information Forms which also carry penalties for non-compliance.
Uniform Business Rate
UBR is a multiplier used to calculate business rates liability. The UBR increases annually with an inflationary uplift and is reset in Scotland and England on 1 April every year.
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Scotland UBR 2022/23
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49.8p (for properties with a RV less than or equal to £51,000)
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51.1p (for properties with a RV of £51,001 to £95,000)
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52.4p (for properties with a RV greater than £95,000)
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England UBR 2022/23
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49.9p (for properties with a RV of less than £51,000)
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51.2p (for properties with a RV greater than or equal to £51,000)
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City of London UBR 2022/23
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51.1p (for properties with a RV less than £51,000)
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52.4p (for properties with a RV of £51,000 to £70,000)
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54.4p (for properties with a RV greater than £70,000)
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Wales UBR 2022/23
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53.5p (for all properties)
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Valuation Notice
Proprietors, tenants and occupiers will receive a Valuation Notice if there is a change to the property, if a proprietor, tenant or occupier carries out any works which affect value (the Notice will detail the new value). The process/timescale for making an appeal will be outlined in the Valuation Notice. From 1 April 2023 additional information will be added to Notices in Scotland.
Valuation Roll
In Scotland, The Valuation Roll is produced and maintained by the Valuation Boards of the various Local Authorities and is published and maintained by the Scottish Assessors Association. It sets out the NAV/RVs of all land and buildings and in some cases, includes the valuation. The Roll is a public document and is available to search online. The equivalent in England is the Valuation List which is published by the Valuation Office Agency.
Business Improvement District (BID)
A BID is a business-led and business-funded body formed to improve a defined commercial area. A levy is payable by companies located in a BID area which will be run as a not for profit organisation. This will manage and deliver projects and services to make the area a better place to work and in which do business.
Enterprise Zone/Area
These are locations designed to encourage business investment while providing support for start-ups to become established. Incentives such as reduced rates are available in these locations, which tend to be sector focussed.
Exempt Properties
Agricultural land & buildings; fish farms; consulates and embassies; buildings registered for public religious worship; and when vacant, properties with RV’s less than £1,700 (Scotland); some properties whose owners have gone into liquidation or administration and properties where occupation is prohibited by law are exempt from entry in the Valuation Roll. This means they do not pay non-domestic rates.
