Business rates are rarely off the radar of local government officials, with sweeping changes underway to local government finance systems. From 30 September 2016, however, those paying business rates are also taking a keen interest, as new rateable values have been published for all properties in England and Wales. This forms part of the 2017 business rates revaluation, which will come into effect on 1 April 2017.
Rateable values – ups and downs
A property’s business rate bill is calculated by multiplying its ‘rateable value’ by the ‘multiplier’. For instance, a property with a rateable value of £20,000, alongside a multiplier of 49.3p, will pay £9,860 per year (i.e. 20,000 x 0.493). Rateable values are set by the Valuation Office Agency (VOA) for England and Wales, and for the Scottish Assessors in Scotland. The 2017 revaluation will see new rateable values published for all properties in England, Scotland and Wales.
Most forecasts expected total rateable value to fall in 2017 across England, Wales and Scotland. However, rateable value in England will in fact rise by just over 10%. Rateable value in Wales has fallen by just under 3%. Figures for Scotland are not yet available.
There is a legal requirement that the business rate ‘multiplier’ is adjusted to balance changes in rateable value. This means that the English multiplier is expected to fall from 49.3p in 2016-17 to 48.0p in 2017-18; but the Welsh multiplier is expected to rise from 48.6p in 2016-17 to 49.9p in 2017-18.
A number of other changes to business rates will come into force at the same time as the revaluation. The combined effect of these may cause some ratepayers’ bills to change significantly:
- The thresholds for small business rate relief are being extended. 100% small business rate relief will be available for qualifying properties with rateable values of £12,000 or less, rising from £6,000. Tapered relief will be available up to £15,000 (previously £12,000).
- There may be substantial changes in valuation practice arising from the 2015 case of This judgment will in future oblige valuation officers to give separate valuations to properties which are physically separate. For instance, where an office is rented together with a car parking space, valuation officers previously had discretion to assign a single rateable value, reflecting the realities of business. In future they will have to assign a separate rateable value to each ‘part’.
- The Government is introducing, for England only, a new system for appealing against rateable values, called Check, Challenge, Appeal. The intention of this system is to agree on the facts underlying valuations at an early stage in the process, hence removing the need for a large number of formal appeals. This system too is going live on 1 April 2017.
Both England and Wales have published schemes for transitional arrangements. The English scheme is intended to limit the impact of very large rises and falls in business rate bills. It sets a limit to the percentage by which a business rate bill can rise in the first year after revaluation, then in the second year after revaluation, and so on; and also to the percentage by which bills can fall each year. Transitional relief could mean that ratepayers who expect to be ‘big winners’ because of the revaluation may not see as much of an immediate change as they expect. By the same token, those who expect their business rate bills to rise substantially following the revaluation may see a smaller rise than they anticipated.
Meanwhile, the Welsh scheme offers relief to ratepayers who will obtain less Small Business Rate Relief after revaluation. It does not have any effect on businesses facing lower bills.
English ratepayers will be able to use the new three-part appeal process, Check, Challenge, Appeal, from 1 April 2017. In the meantime they have the option of contacting the Valuation Office Agency (VOA) if they believe that their new rateable value is incorrect. Likewise, Welsh ratepayers can appeal from 1 April 2017 or contact the VOA in Wales in the interim. Scottish ratepayers should contact the Scottish Assessors – though draft rateable values in Scotland are not expected until the spring of 2017.
More detail on the revaluation can be found in the Library briefing paper Business rates: the 2017 revaluation.