Business Rates and Local Government Finance

Business Rates, also known as National Non-Domestic Rates (NNDR), are a tax on the occupation of non-domestic property. They are a major source of income for local authorities in the United Kingdom and are used to fund various local services. In this explanation, we will cover key terms and vocabulary related to Business Rates and Local Government Finance.

Assessment: The process of determining the rateable value of a non-domestic property. The Valuation Office Agency (VOA) is responsible for the assessment of business rates in England and Wales.

Rateable Value: The value of a non-domestic property as determined by the VOA, which is used to calculate the amount of business rates payable. The rateable value is based on the open market rental value of the property as of a specific date, known as the Antecedent Valuation Date (AVD).

Antecedent Valuation Date (AVD): The date as of which the rateable value of a non-domestic property is determined. The AVD for the current rating list is 1 April 2015.

Rating List: A list of all non-domestic properties in a local authority area, together with their rateable values. The rating list is maintained by the VOA and is used to calculate the business rates payable.

Business Rates Relief: A reduction in the amount of business rates payable, granted to certain types of non-domestic properties or businesses. Examples include small business rate relief, charitable rate relief, and rural rate relief.

Small Business Rate Relief: A relief scheme aimed at supporting small businesses. The relief reduces the amount of business rates payable for eligible properties. The exact amount of relief varies depending on the rateable value of the property and the local authority area.

Material Change of Circumstance (MCC): A change in the conditions or use of a non-domestic property that may affect its rateable value. Examples include planning permission for a change of use, demolition of part of the property, or construction of new buildings nearby.

Check, Challenge, Appeal: The process by which ratepayers can challenge the rateable value of their non-domestic property. The process involves three stages: checking the information held by the VOA, challenging the rateable value if necessary, and appealing to the Valuation Tribunal if the challenge is unsuccessful.

Empty Property Rate: A rate payable on unoccupied non-domestic properties. The rate is typically higher than the standard business rates and is intended to encourage the swift reoccupation of empty properties.

Transitional Relief: A relief scheme aimed at limiting the impact of significant increases or decreases in business rates payable as a result of changes to the rateable value of a non-domestic property. The scheme is automatically applied to eligible properties and is designed to phase in the changes over a number of years.

Local Government Finance Settlement: An annual announcement by the UK Government setting out the amount of funding allocated to local authorities for the coming financial year. The settlement includes details of the business rates retention scheme, which allows local authorities to retain a proportion of the business rates collected in their area.

Business Rates Retention Scheme: A scheme that allows local authorities to retain a proportion of the business rates collected in their area. The scheme is designed to encourage local authorities to promote economic growth and job creation.

Section 44A Agreement: An agreement between a local authority and a ratepayer to defer payment of business rates. The agreement allows the ratepayer to pay the business rates in installments over a longer period than usual.

Mandatory Relief: A relief scheme that reduces the amount of business rates payable for certain types of non-domestic properties, such as those occupied by charities or public bodies. The relief is mandatory, meaning that local authorities have no discretion to grant or refuse it.

Discretionary Relief: A relief scheme that allows local authorities to reduce the amount of business rates payable for certain types of non-domestic properties or businesses, at their discretion. The relief is typically granted to support local economic growth or to assist businesses in difficult circumstances.

Material Day: The date as of which the rateable value of a non-domestic property is determined for the purposes of business rates. The material day is usually 1 April, but may be different in certain circumstances.

Backdated Relief: A relief scheme that allows ratepayers to claim a reduction in the amount of business rates payable for a previous period. The relief is typically granted where the ratepayer has failed to claim relief to which they were entitled, or where there has been a material change of circumstances affecting the rateable value of the property.

State Aid: A form of financial assistance provided by the state to businesses or other organizations. The provision of state aid is subject to strict rules under EU law, which aim to ensure a level playing field between businesses in different member states.

Material Valuation Date (MVD): The date as of which the rateable value of a non-domestic property is determined for the purposes of business rates. The MVD is usually the same as the material day, but may be different in certain circumstances.

In conclusion, Business Rates and Local Government Finance involve a complex set of terms and concepts. Understanding these terms is essential for ratepayers, local authorities, and other stakeholders involved in the administration and collection of business rates. By familiarizing themselves with the key terms and vocabulary, ratepayers can ensure that they are paying the correct amount of business rates and are aware of any reliefs or reductions to which they may be entitled. Local authorities, meanwhile, can ensure that they are administering business rates effectively and efficiently, and that they are using the revenue generated to fund local services and promote economic growth.