Calculating business rates
How business rates are calculated
Business rates are worked out based on your property’s ‘rateable value’. A property's rateable value is an assessment, made by the Valuation Office Agency, of the annual rent the property would rent for if it were available to let on the open market on a fixed valuation date, which is:
- Until 31 March 2017 the rateable values will be based on a valuation date of 1 April 2008
- From 1 April 2017 the rateable values will be based on the valuation date of 1 April 2015
Find out the rateable value for a business property using the address. The Valuation Office may alter the rateable value if it is believed that the circumstances of the property have changed.
The rateable value is not the amount you pay. It is used to calculate the basic annual rate charge (before any entitlement to reliefs/reductions or other adjustments are applied) by multiplying it by a 'rate' (an amount per £ of rateable value) called the multiplier.
For help and advice on all aspects of business rates please contact our Business Rates team.
Appeals against the rateable value
The ratepayer (and certain others who have an interest in the property) can also appeal against the rateable value shown in the list if they believe it is wrong.
If you have reason to believe that your 2017 Rateable Value is not correct, you will need to appeal to the Valuation office Agency (available from 1 April 2017):
- Check: review and confirm the facts about your property held by the Valuation Office Agency
- Challenge: once the facts are established, explain why you believe your valuation is wrong
The Valuation Office Agency compiles a list of all the rateable values called the ratings list. They are also responsible for maintaining the list.
The local Valuation Office that covers the Harborough District is Non-domestic Rates East.
The multiplier is the rate at which each pound of rateable value is charged. The Government Department for Communities and Local Government sets the multiplier for the whole of England each financial year. Multipliers are expressed in pence, whereas rateable value is expressed in pounds.
Since 1 April 2005, there have been 2 multipliers set for each financial year: the standard non-domestic multiplier, and the small business non-domestic multiplier.
The standard multiplier is the higher of the two and is set so as to offset the cost of the small business rate relief scheme.
Standard Business Rate Multiplier
- 2019 / 2020: 50.4p
- 2018 / 2019: 49.3p
- 2017 / 2018: 47.9p
- 2016 / 2017: 49.7p
- 2015 / 2016: 49.3p
- 2014 / 2015: 48.2p
- 2013 / 2014: 47.1p
Small Business Rate Multiplier
- 2019 / 2020: 49.1p
- 2018 / 2019: 48.0p
- 2017 / 2018: 46.6p
- 2016 / 2017: 48.4p
- 2015 / 2016: 48.0p
- 2014 / 2015: 47.1p
- 2013 / 2014: 46.2p
Example of basic business rate calculation
A business property has a Rateable Value of £100,000. This rateable value is too large to attract small business rate relief - so the standard multiplier must be applied. For the 2019/2020 financial year it is 50.4p.
The basic rate charge for the period from 1 April 2019 to 31 March 2020 is therefore found by multiplying the rateable value of £100,000 by the standard multiplier of 50.4p (as the multiplier is expressed in pence it is converted to its £ equivalent - which is £0.504). The calculation is therefore: £100,000 x 0.504 = £50,400
£50,400 would be the amount of business rates payable for the 2019/20 financial year before any transitional arrangements and / or reliefs, if applicable, are applied.
The Valuation Office Agency regularly reassess and update the rateable values of all business properties - they usually do this every 5 years. This is called a Revaluation. It is done to maintain fairness in the system by redistributing the total amount payable in business rates, and reflecting changes in the property market. Revaluation does not raise extra revenue overall.
A revaluation of the rateable value took effect from 1 April 2017 (this was postponed from 2015).
The rateable value is not the amount you pay. It is used to calculate the basic annual rate charge (before any entitlement to reliefs/reductions or other adjustments are applied) by multiplying it by a 'rate' (an amount per pound of rateable value) called the multiplier.
Bill changes and transitional arrangements
Property values can change a good deal depending on the movement of rental values between each revaluation. Transitional arrangements help to phase in the effects of these changes by limiting the amount by which a bill may rise following revaluation. To help pay for the limits on increases in bills after a revaluation, there also has to be limits on reduction 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 multiplier).
The scheme applies only to the bill based on a property at the time of revaluation. If there are any changes to the property after the revaluation date, transitional arrangements will not normally apply to the part of the bill that applies to any increase in ratebable value due to those changes.
Any transitional adjustments will be shown on the front of the rates bill.