The national non-domestic rating system was introduced in 1990, to replace locally set rates. This was accomplished by a revaluation of all non-domestic rates. It is paid into a national pool and redistributed between authorities, in proportion to their adult population. This means that areas with relatively few businesses, or where property values are generally low, are not disadvantaged.

All businesses benefit from the services that local authorities provide (“apparently” tongue firmly in cheek). Some services directly benefit business, for instance roads, the police and fire brigade. Others, such as education and housing, can also be indirectly beneficial. Non-domestic rates or business rates are the way non-domestic property users contribute towards the cost of providing those services.

Rates are usually payable by the occupier of the non-domestic property. This will normally be either the owner/occupier or the leaseholder of the property.

What property is liable to pay business rates?
In general, business rates are payable on most commercial property, such as shops, offices, warehouses and factories. Self-catering accommodation, such as a holiday home, is also liable if it is available for commercial letting to short stay guests for 140 days or more. If you offer bed and breakfast accommodation in your own home to six people or less, you are exempt from business rates, provided that the bed and breakfast use is subsidiary to the residential use. Timeshare units are also liable to business rates.

Some businesses are not rateable, notably:
Farm land and buildings, churches, sewers, public parks, certain property used for people with disabilities, property in an enterprise zone and moveable moorings.

Change of address:
The business rate is calculated on a daily basis. If you take over a commercial property you will be liable for business rates. If you cease to trade, vacate the property or move to another property within your area, the amount you pay or the amount you need to pay will alter. Please inform the council’s business rates section of any move so that they can adjust your bill and make sure you pay the right amount. If you have overpaid your business rates you may be entitled to a refund. Proof of your vacation will be requested.

Rateable value:

All business property has a rateable value unless it is specifically exempt from rates. The rateable value of non-domestic property is fixed in most cases by an independent valuation officer of the Valuation Office Agency. All non-domestic properties are revalued every five years. From 1 April 2005, the rateable value of a property represents the annual open market rental values of 1 April 2003.

How to find out the rateable value of a property
The values of all property are shown in the local rating list, a copy of which may inspected by the District Valuer and Valuation Officer.

The valuation officer may alter the value if they believe that the circumstances of the property have changed. In certain circumstances the ratepayer (and certain others who have an interest in the property) may also propose a change in value. If the ratepayer and the valuation officer do not agree, the matter will be referred to an appeal by a valuation tribunal. The effect of successful proposals or appeals made in the subsequent financial year will be backdated to no earlier than the start of that year. Information about the circumstances in which a change in rateable value may be proposed, and how such a proposal may be made, is available from the valuation office shown above.

How the rateable value affects your rates bill
To work out your bill, the local authority starts by multiplying your rateable value by a factor known as the ‘multiplier’. The multiplier is fixed each year by the government. Between re-evaluations the multiplier cannot increase by more than the annual rate of inflation for each financial year (as at the previous September). For 2008/2009, the multiplier was set at 46.2p. If, for example, your rateable value is £10,000, the calculation for this year is £10,000 x 0.462p = £4620 – this is the amount you would have to pay. There may be further calculations to go through because of transitional arrangements or relief, or both.

Listed below is a table of multipliers for previous financial years and the current financial year for England.

Financial year Multiplier
1990/91 0.348
1991/92 0.386
1992/93 0.402
1993/94 0.416
1994/95 0.423
1995/96 0.432
1996/97 0.449
1997/98 0.458
1998/99 0.474
1999/00 0.489
2000/01 0.416
2001/02 0.43
2002/03 0.437
2003/04 0.444
2004/05 0.456
2005/06 0.422
2006/07 0.433
2007/08 0.444
2008/09 0.462
2009/10 0.485
2010/11 0.414

Small business multiplier
Small business ratepayers have a lower muliplier.

Financial year Multiplier
2008/09 0.458
2009/10 0.481
2010/11 0.407

Small business rate relief:

As a small business owner you could be eligible to claim small business rate relief.

This relief is only available to ratepayers who apply to the council and who occupy either:

(a) one business property, or
(b) one main business property and other additional properties providing those additional properties each have a rateable value of less than £2,599.

The rateable value of the property mentioned in (a), or the total rateable value of all properties mentioned in (b), must be under £25,499 on 1 April in the financial year in question, on the day for which relief is being sought, and each intervening day. If the rateable value, or total rateable value, increases above those levels, relief will cease from the day of the increase. Ratepayers who satisfy these conditions will have the bill for their single or main property calculated using the lower small business non-domestic rating multiplier rather than the ordinary nondomestic rating multiplier that is used to calculate the liability of other businesses.

In addition, if the single or main property is shown on the rating list with a rateable value of up to £12,000, the ratepayer will receive a percentage reduction in their rates bill for this property of up to a maximum of 50% for a property with a rateable value of not more than £6,000. If an application for relief is granted, provided the ratepayer’s circumstances do not change, the application will not need to be renewed until the next revaluation of non-domestic premises, which happens every five years. Certain changes in circumstances will need to be notified to the local authority by the ratepayer (other changes will be picked up by the local authority). The changes which must be notified are:

(a) the ratepayer taking up occupation of a property they did not occupy at the time of
making their application for relief; and
(b) an increase in the rateable value of a property occupied by the ratepayer in an area other than the area of the local authority which granted the relief.

Notification of these changes must be given to the local authority within 4 weeks of the day after the day the change happened. If this happens, there will be no interruption to the ratepayer’s entitlement to the relief.

A notification that the ratepayer has taken up occupation of an additional property must be by way of a fresh application for relief; notice of an increase in rateable value must be given in writing.

Transitional arrangements:

Transitional arrangements will phase in the effect of significant changes in liability, which arise from the 2010 revaluation of non-domestic property. There are limits on the percentage by which bills may increase or decrease each year. Special rules deal with changes in rateable values and the merger or splitting of existing properties. (Transitional relief is calculated automatically, and applied to your account if appropriate.)

All rateable values are reassessed every five years at a general revaluation. The current rating list is based on the 2010 revaluation. Five-yearly revaluations make sure each ratepayer pays their fair contribution and no more, by ensuring that the share of the national rates bill paid by any one ratepayer reflects changes over time in the value of their property relative to others.

Whilst the 2010 revaluation will not increase the amount of rates collected nationally, within this overall picture, over a million properties will see their business rate liabilities reduced and some ratepayers will see increases.
For those that would otherwise see significant increases in their rates liability, the government has put in place a £2 billion transitional relief scheme to limit and phase in changes in rate bills as a result of the 2010 revaluation. To help pay for the limits on increases in bills, there also have to be limits on reductions in bills. Under the transition scheme, limits continue to apply to yearly increases and decreases until the full amount is due (rateable value times the appropriate multiplier).

The scheme applies only to the bill based on a property at the time of the revaluation. If there are any changes to the property after 1st April 2010, transitional arrangements will not normally apply to the part of a bill that relates to any increase in rateable value due to those changes. Changes to your bill as a result of other reasons (such as because of changes to the amount of small business rate relief) are not covered by the transitional arrangements.

The transitional arrangements are applied automatically and are shown on your bill.

Unoccupied property rating:
Business rates will not be payable for the first three months that a property is empty. This is extended to six months in the case of certain industrial properties. After this period rates are payable at the standard occupied rate unless unoccupied property rate has been reduced by the government by order. For the financial year 1 April 2010 to 31 March 2011 no rates are payable on empty properties with a rateable value of less than £18,000. From 1 April 2011 empty rates are payable on properties with a value of more than £2,600, unless otherwise exempt.

In most cases, the unoccupied property rate is zero for properties owned by charities and Community Amateur Sports Clubs. In addition, there are a number of exemptions from empty rate.

Charitable and discretionary relief:
Charities are entitled to relief from rates on any non-domestic property, which is wholly or mainly used for charitable purposes. Relief is given at 80% of the full rate bill or of the transitional bill where the transitional arrangements apply. Billing authorities have discretion to remit all or part of the remaining 20% of a charity’s bill on such property.

Authorities also have discretion to remit all or part of any rate bill in respect of property occupied by certain bodies not established or conducted for profit.

Mandatory relief (80% reduction)
Councils can grant 80% mandatory relief from rates in respect of non domestic properties where the ratepayer is

•A registered charity and the property is used wholly or mainly for charitable purposes, or
•An organisation that is registered with the Inland Revenue as a Community Amateur Sports Club (CASC), and the property is used wholly or mainly by the club and it is not established or conducted for profit.
The Council may grant 80% mandatory relief to certain charities that are not registered. Relief may be given to

•The Church Commissioners
•Registered Societies within the meaning of the Friendly Societies or Industrial and Provident Societies Acts
•Boy Scouts Association and Girl Guides Association units
•Voluntary Schools
•Organisations recognised as charities for tax purposes by the Inland Revenue
80% Mandatory Relief will also be granted charity shops if the property is used wholly or mainly for the sale of goods donated to a charity and the proceeds of the sale are applied for the purposes of the charity.
Additional 20% discretionary relief

Where an organisation is entitled to mandatory relief (above) a further 20% discretionary relief will be granted to

•Registered Charities (with some exceptions – see below)
•Boy Scout and Girl Guides Groups
•Voluntary Maintained Schools
•YMCA / YWCA
No additional 20% discretionary relief will be granted to the following organisations, even if they are registered charities

•Educational and training organisations
•Organisations registered as Friendly Societies or registered as Industrial and Provident Societies
•Housing Associations (Administration Offices)
•Residents Associations

Discretionary relief :
Youth Clubs and Community Centres that are not entitled to mandatory relief may be granted up to 100% relief.

Sports Clubs may be granted relief, which is based on a formula that includes the total number of Youth Members and the total number of

Members. The amount of relief will be tapered if bar turnover is above £75,000 each year.

The formula is the percentage of Youth Members times two multiplied by the percentage of Residents. Where the bar turnover exceeds £75,000 a taper of 75% will apply.

Where a Community Amateur Sports Club (CASC) is in receipt of 80% mandatory relief, it can apply for discretionary relief, and where the calculation using the above formula is more than 80% then additional relief may be awarded.