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Discuss this article in our forums How are business rates calculated?
What is Rateable Value?
Every non-domestic property (there are a few exceptions) has a rateable value (RV), which is the market rent that that property could achieve assuming various statutory assumptions at the valuation date. It is assumed that the property is let on an annual lease with a prospect of continuance and that the tenant (occupier) is responsible for all outgoings (repairs, insurance etc). In addition it is assumed that both the landlord and tenant are fair and reasonable and any goodwill specific to the tenant is excluded. Every five years the Valuation Officer (VO) carries out a revaluation of all non-domestic properties in the country to ensure the RV is up to date.
My property is freehold, how is my Rateable Value calculated?
The rateable value is not necessarily based wholly on the rent payable for a specific building. The VO will look at rents on a number of similar properties in an area (i.e. a row of shops, an industrial estate, or an office building) to form a view of the rate payable per square metre in terms of main space, effectively averaging to take out any highs and lows. The rate adopted per square metre can then be applied to other similar buildings, additions may then be made for parking, spaces, garages, outside stores etc, and allowances given for no w.c’s etc.
What is in terms of main space?
This phrase is used to identify what use forms the majority of the assessment. In order to allow the VO to compare building of unequal size, configuration and use the space is factored back to a common standard. For offices this may be based on ground or first floor office space, with upper floors taken at a lower percentage where there isn’t a lift, for industrials the main space will be the factory/warehouse with an enhancement applied to office space, for shops the space nearest the shop front is most valuable, sales space towards the rear is less valuable as is space on other floors.
Valuation Date
It can take some time for rental information on properties to become available, often because it can take some time to settle rent reviews etc. To assist the VO in obtaining rental information something called an Antecedent Valuation Date is used. This is the date at which values are set and for the 2000 Rating List is 1 April 1998. However the valuation should reflect the physical circumstances at the “material day”
Material Day
The “material day” varies according to the purpose referred to. For the initial entries in the 2000 Rating List when it was published on 1 April 2000 it will be the date of publication (1 April 2000). For subsequent changes it depends on the reason for the change. In the case of list alterations made by the VO it will be the date a merger, split, new entry or deletion of a property in the list occurs, or in the event of an extension or demolition of part the date the VO alters the list. In the case of appeals made by a ratepayer or their agent it will usually be the date the proposal is served on the VO.
How does the rateable value affect my rates bill?
The local authority multiplies the rateable value by the multiplier or “poundage” that is set every year by the government. For the year 2000/01 the multiplier is 41.6p. Therefore if your rateable value is £10,000, the local authority multiply this by 41.6p to arrive at a bill of £4,160, although it must be noted that the amount you actually pay can be affected by transitional or any other relief that may apply.
What is transitional relief?
Transitional relief was first introduced when the uniform business rate was introduced in 1990. It is designed to phase in severe changes in rateable values and therefore rates bills caused by sharp increases or decreases in property values. As it is meant to be self-financing, it affects both increases and decreases it rates bills.
How can I find out more about transitional relief?
The complicated nature of transitional relief means it cannot be fully explained in the booklet, The Crowborough Partnership may issue another one on the subject in the meantime you may want to refer to the leaflet “A Guide to the Revaluation of Business Rates” produced by the DETR (Contact details on the back page).
What other relief is available?
In general certain mandatory relief may be available to charities, religious organisations, agricultural (farming) users. There are some forms of discretionary relief available to other organisations but in general these will only apply in specific cases e.g. rural post offices and are unlikely to apply to businesses in Crowborough. However if payment of business rates is causing genuine hardship a phone call to Wealden District Council may elicit some helpful advice.
Can I appeal against my rateable value?
Yes! Any occupier is entitled to make a proposal to appeal against their rateable value. However usually a proposal will only have effect from the start of the year beginning with the 1st of April in which the appeal is made.
You may make a proposal because of a change to the property or locality (a material change of circumstances). It is important to remember that any rating list alteration can only reflect the circumstances that exist on the day the proposal is received by the VO. So if you are appealing due to road works and the road works are completed by the time your appeal is received no change in assessment can be made for the disruption. Therefore any proposal should be made as soon as possible after the material change has occurred or the work started.
A proposal challenging an alteration to the Rating List made by the VO has to be made within 6 months of the date of the list alteration.
How can I appeal?
You may yourself serve a proposal on the VO or you may employ an agent to act or your behalf. If you choose to do the latter it is recommended you ensure the agent is reputable further advice on this can be obtained from the RICS (www.rics.org.uk/government/rating) or the IRRV (see Contacts on the back page). Proposals ideally should be on the relevant form and may be posted, delivered by hand, faxed or emailed to the Valuation Officer, Union House, Eridge Road, Tunbridge Wells, Kent TN4 8HF. Proposals can be completed on the internet (www.voa.gov.uk).
How long will it take to deal with my appeal?
The VO has introduced programming, which details when appeals will be dealt with. Details of the programme can be found on the VO’s website.
Contacts
For further information:
See the Department of Environment, Regions and Transport website www.local-regions.detr.gov.uk/rev2000
Contact the Valuation Officer, Union House, Eridge Road, Tunbridge Wells Kent 01892 796700 (Note you will need to speak to someone in Eastbourne, but the call can be transferred from Tunbridge Wells
The Royal Institution of Chartered Surveyors, 12 Great George Street, Parliament Square, London SW1P 3AD Tel Helpline 0207 222 7000 Fax 0207 334 3811 www.rics.org.uk
Institute of Revenues, Rating and Valuation, 41 Doughty Street, London WC1n 2LF Tel 0207 831 3505 Fax 0207 831 2048
Author
This article was written by Christopher Grose of Bisset Moffatt Hill (www.bmh.co.uk) Please feel free to call Christopher on 01293 440066 to discuss Business Rates further. Discuss this article in our forums |
