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How Business rates are calculated

Business rates, also known as non domestic rates are a contribution from businesses towards the cost of local services. Although collected by local authorities the money is pooled by central government and redistributed to councils on the basis of their need.

The gross rates payable on each property depend on the rateable value and the national non domestic multiplier. There are also a number of types of relief from rates which can be applied to individual accounts.

Rateable Value

The rateable value of a property broadly represents the yearly rent that a property could have been let for on the open market on a particular date. For the current rating list, which came into effect on 1st April 2010 this date was 1st April 2008. The value is calculated by the Valuation Office Agency (VOA)  which is part of HMRC. They can alter the value if circumstances change, and the ratepayer can appeal against the value if they believe that it is wrong. Further information, including details of how the value of most properties has been calculated and the grounds and process for submitting an appeal can be found on the VOA website, www.voa.gov.uk

National Non Domestic Multiplier

The rateable value is multiplied by the appropriate multiplier to calculate the rates payable, before any relief is applied. The multipliers are set each financial year by the Government, and have been capped to an annual increase of 2% since 2014/15. The multipliers for 2014-15 are 0.471p in the £ for all empty properties and occupied properties with a rateable value of £18000 or over. For 2015-16 these are 0.480 and 0.493 respectively.

Transitional Arrangements

All rateable values are reassessed every five years. To prevent ratepayers experiencing large increases in the amount due as a result of a national revaluation there are transitional arrangements which limit the annual increase to a prescribed percentage each year. To help pay for this the amount by which a bill can reduce as a result of revaluation is also limited.

Further information about the business rate system may be obtained from the Business Link website.

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