Business Rates, also called Non Domestic Rates, is contribution made by businesses towards the cost of the services which the Council provides and are payable by the occupier of the business premises. If the property is empty (unoccupied) then the business rates are payable by the person entitled to occupy. That is the owner or leaseholder of the property. There are some important changes to the legislation relating to unoccupied properties which come in to force from 1st April 2008. Details of the changes can be found on by clicking on business rates empty property rates.
The amount of rates payable is calculated by multiplying the Rateable Value of the property by the Non Domestic Rate Multiplier (less any reductions applicable)
Business Rates are set at the same rate in the pound (‘the multiplier’) across the whole of England, so local councils cannot set different multipliers, except for the City of London.
The Rateable Value
Apart from properties that are exempt from Business Rates, each non-domestic property has a rateable value which is set by the valuation officers of the Valuation Office Agency (VOA), an agency of Her Majesty’s Revenue and Customs and not by the Council. The VOA draws up and maintains a full list of all rateable values, known as the rating list. This is available on the VOA website.
The rateable value broadly represents the yearly rent the property could have been let for on the open market on a particular date. For the current rating list, that came into effect on 1st April 2005, this date was set as 1st April 2003. The valuation officer may alter the value if circumstances change. 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 the grounds on which appeals may be made and the process for doing so can be found on the VOA website.
In order that the rateable value truly reflects the rental market all non domestic properties are re-valued every 5 years and the next revaluation will be in 2010 based on rents as at 1st April 2008.
National Non-Domestic Rating Multiplier
There are two multipliers; the standard non-domestic rating multiplier and, since 2005, 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, except in the City of London where special arrangements apply, according to formulae set by legislation. The multipliers change each year in line with inflation and to take account of the cost of small business rate relief. In the year of a revaluation, the multipliers are 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. Further information on the relevant multipliers for each year can be found on our webpage - business rates calculations and a link to this page can be found below.
Business rates are collected by local councils but are paid into a National Pool from which Central Government then gives each area a share. This means that an area with relatively few businesses, or where property values are generally low, is not at a disadvantage owing to its low Business Rate income.