What are non-domestic rates?
Non-domestic rates, also known as business rates are a tax paid by the liable party of all non-domestic property in a similar way to council tax in respect of domestic property.
Information relating to non-domestic rating income forms part of the council tax budgetary information.
Calculation of business rates
The initial calculation of business rates is worked out by taking the rateable value of a premises and multiplying it by the non-domestic rating poundage in respect of the relevant financial year. This calculation provides the gross annual charge for a property. When calculating periods of liability, business rates is calculated on a daily basis from the start of the financial year (or where applicable, the date a party becomes responsible) until the end of the respective financial year. Where the party responsible for liability ceases, the amount of tax is recalculated at the time the change in circumstances occurs and a revised bill is issued.
Rateable value
The rateable value is set by the Valuation Office Agency (part of HMRC) by using information relating to the property such as rental value. The rateable value of all business rated property is updated periodically to factor in changes to the economy with the last revaluation on 1 April 2017 and the next scheduled for 1 April 2023. Material changes of circumstance and alterations to a property can also influence the rateable value. Rateable value amendments of this nature take effect from the actual date of change.
You can check the rateable value of any business rated assessment.
If you disagree with the rateable value of a property, provided you are a relevant interested party you can use the check, challenge appeal process here. This facility can also be used as a lookup tool to find rateable values of any business rated property in England and Wales.
If you have started the check, challenge appeal process with the VOA in respect of a property then this does not allow you to withhold payment in respect of any business rates bill you have received. If you do have an outstanding proposal with the VOA, then you must continue to make payment as billed. In the event of any change to the rateable value that results in a reduced liability then any overpayment of business rates will be reimbursed.
Non-domestic rate poundage
The poundage, also known as the multiplier is set by central government each financial year and is calculated based on inflation changes. Factors influencing the economic climate has resulted in the government imposing a freeze on the business rates multiplier from 2021/22 onwards.
There are two multipliers utilised when calculating the non-domestic rates gross charge, they are applicable as follows:
Small business multiplier
- All occupied non-domestic property with a rateable value of less than £51,000
Standard multiplier
- All occupied non-domestic property with a rateable value of £51,000 or more
- All unoccupied non-domestic property
| Year | Small business multiplier | Standard multiplier |
|---|---|---|
| 2016/17 | 48.4p | 49.7p |
| 2017/18 | 46.6p | 47.9p |
| 2018/19 | 48.0p | 49.3p |
| 2019/20 | 49.1p | 50.4p |
| 2020/21 | 49.9p | 51.2p |
| 2021/22 | 49.9p | 51.2p |
| 2022/23 | 49.9p | 51.2p |
| 2023/24 | 49.9p | 51.2p |
Transitional Relief / Premium
The purpose of transitional arrangements is to cap increases and decreases to the amount payable where the rateable value of a property has changed significantly following revaluation. For example, should the rateable value of property double at revaluation, transitional relief would apply in order to reduce the amount payable in-line with the prescribed capping level. Transitional relief/premium is automatically applied to ratepayer accounts as part of the initial bill calculation.
Limits on increases
| Year | RV £20,000 or less | RV £20,001 to £100,000 | RV £100,001 or above |
|---|---|---|---|
| 2017/18 | 5% | 12.5% | 42% |
| 2018/19 | 7.5% | 17.5% | 32% |
| 2019/20 | 10% | 20% | 49% |
| 2020/21 | 15% | 25% | 16% |
| 2021/22 | 15% | 25% | 6% |
| 2022/23 | -- | -- | -- |
| 2023/24 | 5% | 15% | 30% |
Limits on decreases
| Year | RV £20,000 or less | RV £20,001 to £100,000 | RV £100,001 or above |
|---|---|---|---|
| 2017/18 | 20% | 10% | 4.1% |
| 2018/19 | 30% | 15% | 4.6% |
| 2019/20 | 35% | 20% | 5.9% |
| 2020/21 | 55% | 25% | 5.8% |
| 2021/22 | 55% | 25% | 4.8% |
| From 2022/23 Transitional Premiums cease to apply |
With the exception of the limits on increases relating to 2023/24, when calculating transitional amounts an annual inflation factor is also applicable.