How business rates are calculated
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 (HMRC). They draw-up and maintain a full list of all rateable values, these are available at GOV.UK: Business rates.
The rateable value of your property is shown on the front of your bill. This broadly represents the yearly rent the property could have been let for on the open market on a particular date specified in legislation. For the current rating list, this date was set as 1 April 2021.
The VOA may alter the valuation if circumstances change. The ratepayer (and certain others who have an interest in the property) can also check and challenge the valuation shown in the list if they believe it is wrong. Further information about the grounds on which challenges may be made, and the process for doing so, can be obtained by contacting the VOA, or by consulting the VOA website: GOV.UK: Collection - Check and challenge your business rates valuation: step by step.
The local council works out the business rates bill by multiplying the rateable value of the property by the appropriate multiplier set by the government.
There are two multipliers:
- the standard non-domestic rating multiplier
- the small business non-domestic rating multiplier
Ratepayers who occupy a property with a rateable value which does not exceed £50,999 (and who are neither entitled to certain other mandatory relief[s], nor liable for unoccupied property rates) will have their bills calculated using the lower small business non-domestic rating multiplier, rather than the standard non-domestic rating multiplier.
Both multipliers for a financial year are based on the previous year's multiplier, adjusted to reflect the Consumer Price Index (CPI) inflation figure for the September prior to the billing year, unless a lower multiplier is set by the government. The current multipliers are shown on the front of your bill.
All non-domestic property rateable values are reassessed at revaluations. The most recent revaluation took effect from 1 April 2023. Revaluations ensure that business rates bills are up-to-date and more accurately reflect current rental values and relative changes in rents. Frequent revaluations ensure the system continues to be responsive to changing economic conditions.
At a revaluation, some ratepayers will see reductions or no change in their bill whereas some ratepayers will see increases. Transitional relief schemes are introduced at each revaluation to help those facing increases. Transitional relief is applied automatically to bills. Further information about transitional arrangements may be obtained from the local authority or at GOV.UK: Business rates.
Business rates are generally payable in respect of unoccupied non-domestic property. However, they are generally not payable for the first three months that a property is empty. This is extended to six months in the case of certain industrial premises, whilst certain other properties such as vacant listed buildings are not liable for business rates until they are reoccupied. Full details on exemptions can be obtained from your local authority or from gov.uk at GOV.UK: Business rates relief.
A ratepayer is liable for the full non-domestic rate whether a property is wholly occupied or only partly occupied. Where a property is partly occupied for a short time, the local authority has discretion in certain cases to award relief in respect of the unoccupied part. Full details can be obtained from the local council.
From 1 April 2023, holiday accommodation will only be subject to business rates after it has been subject to short-term letting for a period of at least 140 days and commercially let for at least 70 days in that period. It should also continue to be made available for the next 12 months.
The effective date of entry into the rating list is when the condition has been met ie. after 140 days minimum.
If you meet this condition, please email the link to the letting website you use to firstname.lastname@example.org and confirm the date short-term letting commenced.
If the council accept this condition is met we will write to the Valuation Office Agency (VOA) asking them to determine a Rateable Value (RV) and delete the Band from the council tax list. The final determination is with the VOA and they will request further information regarding the lettings, so you should continue paying full council tax until any decision is made.
Further details and guidance can be found on the VOA website GOV.UK: Business rates Self-catering and holiday let accommodation.
The VOA can be contacted via their website https://www.gov.uk/contact-voa or by phone 03000 501 501.