A brief guide to the system of non-domestic rating, better known as ‘business rates’.Jump to full report >>
This note provides a brief guide to the system of non-domestic rating, better known as ‘business rates’.
Business rates are a property tax paid by occupants of non-domestic properties. The basic rates bill is determined by multiplying the rateable value of a property (a ‘hereditament’) by the ‘multiplier’. A property’s rateable value is set by the Valuation Office Agency (in Scotland, the Assessors; and in Northern Ireland, Land and Property Services) at regular intervals.
The multiplier is expressed in pence per pound of rateable value. It is set by the UK Government in England and by the Scottish and Welsh Governments in Scotland and Wales. In Northern Ireland, both the Northern Ireland Executive and the district councils set separate rating multipliers, with the full rate liability collected by the councils.
Billing authorities (district and unitary councils) collect business rates. In England, the revenue is partly pooled at central government level and redistributed, and part is retained locally. In Scotland and Wales, the rates collected are pooled at the devolved level and redistributed to the billing authorities via a needs-based formula. Scotland also operates a Business Rate Incentive Scheme.
Various reliefs, both mandatory and discretionary, are available from full business rates liability. Limited powers also exist for local authorities to set supplementary business rates.
Business rates are devolved to Scotland, Wales and Northern Ireland. This note focuses on the operation of the business rates system in England.
A further Library briefing, Reviewing and reforming business rates, covers developments in 2015 and 2016 in more detail. Additional detail on the revaluation of business rates coming into effect on 1 April 2017 can be found in the Library briefing Business rates: the 2017 revaluation.
A detailed briefing on the Local Government Finance Bill 2016-17 can be found in the Library briefing papers The Local Government Finance Bill 2016-17 and The Local Government Finance Bill 2016-17: progress of the Bill.