2010 Business Rating Revaluations

Business rates are a significant overhead for businesses. Typically, these are equivalent to 45% of the annual rental value.

The Valuation Office Agency (VOA) is required to revalue rateable-values for non-domestic premises every five years. The VOA has recently completed this task. The revised rateable-values will be effective from 1st April 2010. These values are based on hypothetical rental values for premises on 1st April 2008, a time of relative prosperity compared to the current economic climate and a buoyant commercial property market.

Commentary on the revised rateable-values suggests that, as a result of the deterioration of the commercial property market, the inaccuracy of the information used by the VOA and the billing authorities to calculate rateable-values, and, in an effort to correct the undervaluation of premises during the 2005 revaluation, rateable-values may increase significantly during the intervening 5 year period. To enable businesses to adjust to the increased rating liabilities, transitional relief will be available to address large changes in individual rateable values. In these instances, rating liabilities will increase year on year, with substantial increases realised over the five year period.

The VOA is currently issuing summary valuations to rate-payers, specifying the revised rateable-values and summarising the information that forms the basis of the assessment.

As the rateable-value is based on the potential rental value of the premises, the figure is influenced by a range of factors including the circumstances of the site, facilities installed, and the physical, geographical and economic attributes of the site location.

Given the sensitivity of the rental value to these factors and the limited information held by the VOA and the billing authority, it is important that the summary valuations and resulting rate demands are scrutinised and the information used to inform the assessment reviewed. This will identify whether the rateable value is accurate and all appropriate reliefs and adjustments are applied to calculate the rate liability.

Given the limited information available to the VOA and the billing authorities, rating liabilities are often inaccurate and are frequently successfully challenged. However, the business rating system is complex and a short term savings may result in greater expense in the long term.

To contact Adrian Smith to discuss your revised rating assessment and the approach of the Valuation Office Agency and the Billing Authority to the 2010 business rating click here