Business Rates and Rateable Value
On 1 April 2010, the Rateable Value of all business and non-domestic property in England, Scotland and Wales were reassessed.
The assessment, or revaluation, is carried out every 5 years by the Valuation Office Agency ('VO'). The revaluation is about bringing values up to date to reflect changes in the market. The valuation is at what is known as the "antecedent valuation date" (“AVD”) which is 1 April 2008. (For the 2005 Rateable Value, the AVD is 1 April 2003.) When the valuations are compiled, the relevant information is put on what is known as the Valuation List.
According to the VO, "The revaluation does not raise any extra revenue for government: it redistributes the amount businesses pay based on the rental market changes. Some areas become more in demand so values there rise relative to the national average. In other areas demand and values fall relative to the national average." In practice, however, although the revaluation itself is neutral, the government can raise extra revenue by adjusting the basis upon which business rates liability is calculated.
The basic calculation is to multiply the Uniform Business Rate by the Rateable Value of the property, subject to any transitional and/or relief entitlement, but adjustments can be made to any of those entitlements. Property that is empty is exempt from business rates for three months after the property becomes vacant; industrial premises, such as warehouses, are exempt for a further 3 months; listed buildings are exempt until they become occupied again; properties owned by charities are exempt if the property's next use is likely to be wholly or mainly for charitable purposes
The Rateable Value is based on the valuation tone at the AVD. For shops where valuation approach is zoning, the tone is based on Zone A £x psm is not a specific devaluation of your particular rent, but an average of the rents in a particular part of the street and/or for the type of premises in the locality. Also, plant and machinery can be rated and a separate value is made for air-conditioning, for example.
If you think the Rateable Value of your property is too high, then it would be possible to appeal*. Although an appeal against the RV may be successful, please note that every appeal is an opportunity for the VO to re-inspect the property and ensure its valuation areas are correct. If the RV of your property has been based on areas that are too small then the RV could go up. Although the RV should be precise arithmetically, the VO will normally round down the RV so generally the RV is not as high as it could be. (* If you are a tenant and think your landlord is intending to oppose renewal of your tenancy then it may not pay to try to reduce your Rateable Value because you could lose out on payment of statutory compensation. Conversely, if you are a landlord then it may pay to try to get the Rateable Value reduced before the effective date for payment of any compensation.)
Rateable Value is what I call a "floating value' because the entry in the Valuation List can be altered at any time. Not only as a result of a successful appeal but also where the VO updates the entry or an appeal results in an alteration that takes effect on a specific date, for example, for material change of circumstances, of which road works is an example, where a temporary reduction for the period of the works can sometimes be obtained, or a change in the physical layout of the building. You can obtain more information from the VOA website
Rating is a complex subject that requires specialist advice. I have an association with a leading firm of chartered rating surveyors and can provide a comprehensive service for Rateable Value appeals, including a free audit of rates payable. The preference is for groups of shops, but individual premises with an existing Rateable Value of at least £25,000 would be considered.
To contact me, please telephone 01531 631892 or email help@michaellever.co.uk
I look forward to helping you in some way.
Michael Lever
PS - Please note that any reduction in Rateable Value may not necessarily result in the same pro-rata reduction in actual rates payable. The actual rates payable depend upon any reliefs. With Transitional Relief, for example, it is possible to end up having to pay more business rates even though the Rateable Value is lower.
On 1 April 2010, the Rateable Value of all business and non-domestic property in England, Scotland and Wales were reassessed.
The assessment, or revaluation, is carried out every 5 years by the Valuation Office Agency ('VO'). The revaluation is about bringing values up to date to reflect changes in the market. The valuation is at what is known as the "antecedent valuation date" (“AVD”) which is 1 April 2008. (For the 2005 Rateable Value, the AVD is 1 April 2003.) When the valuations are compiled, the relevant information is put on what is known as the Valuation List.
According to the VO, "The revaluation does not raise any extra revenue for government: it redistributes the amount businesses pay based on the rental market changes. Some areas become more in demand so values there rise relative to the national average. In other areas demand and values fall relative to the national average." In practice, however, although the revaluation itself is neutral, the government can raise extra revenue by adjusting the basis upon which business rates liability is calculated.
The basic calculation is to multiply the Uniform Business Rate by the Rateable Value of the property, subject to any transitional and/or relief entitlement, but adjustments can be made to any of those entitlements. Property that is empty is exempt from business rates for three months after the property becomes vacant; industrial premises, such as warehouses, are exempt for a further 3 months; listed buildings are exempt until they become occupied again; properties owned by charities are exempt if the property's next use is likely to be wholly or mainly for charitable purposes
The Rateable Value is based on the valuation tone at the AVD. For shops where valuation approach is zoning, the tone is based on Zone A £x psm is not a specific devaluation of your particular rent, but an average of the rents in a particular part of the street and/or for the type of premises in the locality. Also, plant and machinery can be rated and a separate value is made for air-conditioning, for example.
If you think the Rateable Value of your property is too high, then it would be possible to appeal*. Although an appeal against the RV may be successful, please note that every appeal is an opportunity for the VO to re-inspect the property and ensure its valuation areas are correct. If the RV of your property has been based on areas that are too small then the RV could go up. Although the RV should be precise arithmetically, the VO will normally round down the RV so generally the RV is not as high as it could be. (* If you are a tenant and think your landlord is intending to oppose renewal of your tenancy then it may not pay to try to reduce your Rateable Value because you could lose out on payment of statutory compensation. Conversely, if you are a landlord then it may pay to try to get the Rateable Value reduced before the effective date for payment of any compensation.)
Rateable Value is what I call a "floating value' because the entry in the Valuation List can be altered at any time. Not only as a result of a successful appeal but also where the VO updates the entry or an appeal results in an alteration that takes effect on a specific date, for example, for material change of circumstances, of which road works is an example, where a temporary reduction for the period of the works can sometimes be obtained, or a change in the physical layout of the building. You can obtain more information from the VOA website
Rating is a complex subject that requires specialist advice. I have an association with a leading firm of chartered rating surveyors and can provide a comprehensive service for Rateable Value appeals, including a free audit of rates payable. The preference is for groups of shops, but individual premises with an existing Rateable Value of at least £25,000 would be considered.
To contact me, please telephone 01531 631892 or email help@michaellever.co.uk
I look forward to helping you in some way.
Michael Lever
PS - Please note that any reduction in Rateable Value may not necessarily result in the same pro-rata reduction in actual rates payable. The actual rates payable depend upon any reliefs. With Transitional Relief, for example, it is possible to end up having to pay more business rates even though the Rateable Value is lower.