Business Rates in Context

Business Rates, also known as National Non-Domestic Rates (NNDR), are a property tax levied on most non-domestic properties in England and Wales. This includes offices, shops, factories, and other commercial properties. Business Rates are collected by local authorities and are a significant source of income for them. In this explanation, we will cover key terms and vocabulary related to Business Rates in context, which will be useful for those studying the Certificate in Business Rates.

Rateable Value is the value of a non-domestic property that is used to calculate Business Rates. It is assessed by the Valuation Office Agency (VOA) and is based on the open market rental value of the property on a specific date, known as the Antecedent Valuation Date (AVD). The AVD for the current rating list is 1st April 2015. The rateable value is then multiplied by the multiplier to calculate the Business Rates payable.

The multiplier is a figure set by the government that is used to calculate Business Rates. There are two multipliers: the standard multiplier and the small business multiplier. The standard multiplier is higher and is used for properties with a rateable value above a certain threshold, while the small business multiplier is lower and is used for properties with a rateable value below that threshold. The threshold for the 2022/23 rating list is £51,000.

Transitional Arrangements are put in place to phase in large increases or decreases in Business Rates resulting from changes in the rateable value. This is to provide stability for businesses and prevent large sudden increases or decreases in their rates bills. Transitional arrangements are automatically applied to most properties and last for a period of five years from the start of the rating list.

Small Business Rate Relief (SBRR) is a relief scheme aimed at supporting small businesses. It provides a reduction in Business Rates for eligible properties with a rateable value below a certain threshold. For the 2022/23 rating list, the threshold is £15,000. Businesses with a rateable value below £12,000 are entitled to 100% relief, while those with a rateable value between £12,000 and £15,000 receive a tapered relief.

Material Change of Circumstance (MCC) is a change in the property or its locality that could affect the rateable value. If a business believes that there has been a MCC, they can request a revaluation of their property from the VOA. Examples of MCC include a new road being built nearby, or a significant increase in the size of the property.

Empty Property Rate is a rate charged on unoccupied non-domestic properties. The rate is set at 100% of the Business Rates payable, meaning that businesses are liable for the full amount of rates even if the property is empty. However, there are some exemptions and reliefs available for empty properties, such as if the property has a rateable value below a certain threshold or if it is temporarily unoccupied due to redevelopment or refurbishment.

Mandatory Relief is a relief that must be granted by the local authority in certain circumstances. This includes relief for charities and community amateur sports clubs, as well as relief for properties that are mainly used for worship or religious instruction.

Discretionary Relief is a relief that can be granted by the local authority at their discretion. This includes relief for businesses that are in financial difficulty, or for businesses that are located in areas that are subject to regeneration or redevelopment.

Material Day is the day on which the VOA takes a snapshot of the property and its locality for the purposes of assessing the rateable value. This is usually the date of the Antecedent Valuation Date (AVD), but can be a different date if there has been a material change of circumstance.

Check, Challenge, Appeal (CCA) is the process by which businesses can challenge the rateable value of their property. The process involves three stages: checking the information held by the VOA, challenging the rateable value if there are grounds for doing so, and appealing to the Valuation Tribunal if the challenge is not successful.

In conclusion, Business Rates are a complex area with a range of key terms and vocabulary that are important to understand. This explanation has covered some of the key terms, including rateable value, multiplier, transitional arrangements, small business rate relief, material change of circumstance, empty property rate, mandatory relief, discretionary relief, material day, and check, challenge, appeal. By understanding these terms, businesses can better navigate the Business Rates system and ensure that they are paying the correct amount. It is important to note that Business Rates can be a significant cost for businesses, and it is therefore essential to seek professional advice if there are any concerns or queries about the amount payable.