Business rates revaluation: concepts
All non-domestic properties in England, Scotland, Northern Ireland and Wales pay non-domestic rates, more commonly known as ‘business rates’.
Each non-domestic property is assigned a ‘rateable value’, which represents the rental value of the property on the open market on a specified ‘antecedent valuation date’ (AVD).
The rateable value is then multiplied by a ‘multiplier’ (set separately in each part of the UK) to produce the annual business rates bill.
Hence a property with a rateable value of £20,000, alongside a multiplier of 49.9p, will have a basic liability of £9,980 per year (i.e. 20,000 x 0.499). A property may then benefit from one or more reliefs.
The standard legal requirement in England, Scotland and Wales is for a general revaluation
to take place every five years (though this is expected to change during the 2020s). Revaluations ensure that rateable values stay broadly in line with properties’ annual rental values.
Revaluations are carried out by the Valuation Office Agency (VOA) in England and Wales, by the Assessors in Scotland, and by Land & Property Services (LPS) in Northern Ireland.
How are properties valued?
Most properties’ rateable value is based on their ‘annual rental value’, i.e. the amount for which they would let on the open market in good condition.
This does not mean that the rateable value must be exactly equal to the rent paid on the valuation date. Valuers will seek to ensure that similar properties in similar areas attract similar rateable values.
The Government plans to make more information available about valuation practice in England during the 2023-26 and 2026-29 rating lists.
In cases where it is difficult or impossible to determine a meaningful annual rental value from direct rental evidence, other methods may be used: for instance, pubs and hotels are normally valued using the receipts and expenditure’ method, which relates to turnover levels.
For properties where limited meaningful evidence about either rental values or profits is available – for instance, for unusual or unique buildings – the “contractor’s basis” is used. However, both of these methods have the same legislative basis as the standard method of valuation.
2023: New rateable values
In England, Scotland and Wales, the last revaluation came into effect on 1 April 2017. In those three parts of the UK, the next revaluation was initially to have come into effect in 2022.
In 2016, the UK Government signalled its intention to bring the 2022 revaluation for England forward to 2021, to be followed by three-yearly revaluations (2024, 2027 etc.)
After the VOA had made substantial progress on the 2021 revaluation for England, it was postponed in May 2020 due to the Covid-19 pandemic. The Government then announced a delay to 2023, which was implemented by the Non-Domestic Rating (Lists) Act 2021.
The AVD for the revaluation was set at 1 April 2021.
Subsequently, in June 2021 the Government consulted on moving to a three yearly revaluation cycle, and in October 2021 it confirmed this decision: thus subsequent revaluations in England would take effect in 2026, 2029 and so on.
The new set of rateable values that took effect on 1 April 2023 is described as a new ‘rating list’. Thus legislation and documentation will refer to previous rateable values as ‘the 2017-23 rating list’, and the new ones as ‘the 2023-26 rating list’.
The UK Government has stated that reducing the length of time between the AVD and a revaluation taking effect remains “an aspiration once the new three-yearly cycle and supporting changes are fully bedded in”.
In the longer term, the UK Government has stated it will consider the case for an annual revaluation cycle.