How Are Business Rates Calculated?

The amount of rates payable takes two factors into account, the rateable value of a property and the 'multiplier' or 'poundage'.

Rateable values are determined by the Valuation Office Agency, which is an executive agency of the Inland Revenue.

Rateable values normally change every five years to reflect market values. This is called revaluation. The last revaluation took place in 2010. A revaluation of all rateable values has been carried out by the Valuation Office Agency and any change to your rateable value will come into effect from 1st April 2017. The Valuation Office Agency have written to all businesses with details of the revaluation and any changes to rateable values.

Rateable values are based on the size of a property, and can change as a result of structural alterations to the business. The multiplier is a figure worked out by the Government for each rate year (1st April to 31st March). Currently the multiplier is only allowed to change each year in line with inflation.

Based on the full 2016/2017 multiplier, for example, if your rateable value is £20,000, the calculation will give an amount of £9,860 to pay for the year. 

For properties with RV greater than 18,000 the multiplier is set at 49.7p, for properties with a RV less than 18,000 the multiplier is 48.4p.

What discounts and reductions are available?

Transitional Relief is an adjustment to the bill where rates increase significantly following a revaluation in order to phase in the change gradually. If rateable values decrease significantly a transitional surcharge can apply where the full decrease is phased in gradually.

A new transitional relief scheme is introduced at 1st April 2017 following the revaluation of rateable values. Full details about this new scheme can be found in the Business Rates leaflet.

Mandatory and Discretionary Relief are reductions to your Business Rates for a property occupied by a registered charity or by a non-profit making organisation. Relief may also be given to Post Offices or similar small community operations in rural areas.

Small Business Rate Relief was introduced from 1st April 2005. If you have a business with a rateable value less than £18,000 you may be able to qualify. For advice on how the scheme works and how to claim see our Small Business Rate Relief page.