Our Guide to Business Rates.

National Non Domestic Rates (Business Rates)

National Non Domestic Rates (NNDR), often called Business Rates, was introduced on 1st April 1990. Business Rates is a form of taxation levied on the occupier of commercial premises. It is collected by the local authority on behalf of the government.

Business Rates are payable on every property that has an entry in the Rating List. The Rating List is compiled every five years by the Valuation Office Agency (VOA). It gives details of every commercial property in England and Wales. There is a similar document for properties in Scotland called the Valuation Roll, which is compiled by the Assessors Office. The entry includes the address, the description and the Rateable Value (RV) of the property. The VOA or Assessors Office has a duty to maintain an accurate list and will make alterations to the list - new entries, deletions, changes to the Rateable Value - whenever necessary.

Rateable Value

Rating lists are compiled every five years - 1990, 1995, 2000, 2005 and so on - this is known as Revaluation.

The factors affecting the value of your property can change drastically over the years depending on the economic circumstances affecting the type of property in a particular location. It is quite normal therefore to have significant differences in the Rateable Value between revaluations.

Obviously, events can also happen throughout the five-year life of a list that can affect the value of a property and the VOA has a duty to reflect those changes in the Rateable Value, for example extensions or demolitions to the premises, or an event in the locality that affects the value of the property.

Rights of Appeal

The ratepayer has a right to challenge an entry in the rating list. Whether it is the new value brought about by revaluation or a value set by the valuation officer because of a material change in the property or the locality, or even if the ratepayer just feels that his or her business is being adversely affected by something nearby - road works for instance - the ratepayer can appeal against the rateable value provided that the appeal is submitted within appropriate time limits. The ratepayer or their agent attempts to secure a reduction in the Rateable Value because the RV has an impact on the Rate Liability. The RV however is not the only factor affecting rate liability, which is why it is advisable to instruct a rating surveyor to act on your behalf.

Transitional Arrangements.

The basic principle of non-domestic rates is that the amount payable per year is the Rateable Value multiplied by the National Non Domestic Rating Multiplier or Uniform Business Rate (UBR). However, rate liability is not always that simple. This is because of Transitional Arrangements.

Revaluation can result in a large increase in a property's Rateable Value. To avoid this resulting in an excessive increase in the ratepayers' liability there are rules that set out the maximum amount they will be required to pay. These rules are called Transitional Arrangements, sometimes known as Transitional Relief or Transitional Phasing. If revaluation results in an excessive increase in the amount you have to pay, you will receive transitional relief to reduce your bill to a more reasonable level.

To make the transitional scheme self-financing, some ratepayers are required to pay an additional amount. This is known as a transitional surcharge or transitional premium. The premium is paid by businesses whose liability has reduced due to revaluation. These Ratepayers will still pay less than they paid previously, but the reduction is subject to a lower limit.

From 1st April 2005, in England, Transitional Arrangements only apply to the first four years of a rating list, in Scotland they apply to the first three years and in Wales transitional arrangements no longer apply at all.

Small Business Rate Relief

From 1st April 2005 a new scheme was introduced in England to benefit small businesses. Small businesses must register with their local authority and must only occupy one property. The property must have a rateable value of less than 15,000 (21,500 in Greater London). A business may also qualify as a small business if they have one main property and other smaller properties such as a store or car parking space. To qualify, the rateable values of the smaller assessments must be less than 2,200 and the total rateable value must be less than 15,000 or 21,500 in Greater London.

A business that qualifies for Small Business Rate Relief (or SBRR) will receive relief on a sliding scale based on the rateable value of their property. A small business with an RV of 5,000 will receive 50% relief, a business with an RV of 6,000 will receive 40% relief, a business with an RV of 7,000 will receive 30% relief and so on down to nil relief at RV 10,000.

The scheme is funded by applying a supplement to the bills of those ratepayers who don't receive Small Business Rate Relief. There is a 'buffer zone' for small businesses with a rateable value between 10,000 and 14,999 whereby they do not receive relief but are not be required to pay the supplement.

For more information on Non Domestic Rating you can visit these websites.

The Valuation Office Agency

The Scottish Assessors Association

Communities and Local Government