BUSINESS RATES (NATIONAL NON DOMESTIC RATES or NNDR) – INFORMATION SHEET
Ensuring that as much money as possible is saved in respect of rates payable is becoming more and more important in the current financial climate. A number of properties are now being transferred to town and parish councils and this means that they will become responsible for the payment of business rates on these properties, however there are ways in which their liability can be limited.
The information provided below outlines some frequently asked questions in respect of business rates.
1. WHAT ARE BUSINESS RATES?
A tax levied in accordance with statute - primarily the Local Government Finance Act 1988.
2. WHO PAYS?
Every occupier (either owner or tenant) of non-domestic property, including town and parish councils are liable for this tax. This includes not only the offices they occupy but stores, public conveniences, community buildings and more – in fact pretty much every building.
3. WHO DO WE PAY THE TAX TO?
The tax is collected on behalf of central government by local authorities designated as billing authorities - in this case Cornwall Council. The income from all non domestic rates is paid into a national pool and is redistributed between local authorities according to their adult population.
4. CAN TOWN OR PARISH COUNCILS GET ANY DISCOUNTS OR EXEMPTIONS?
Yes - property used for the disabled can be exempt.
In the case of a charitable organisation, or an amateur sports club an application can be made to claim relief. Charities receive a mandatory 80% relief on rates and sometimes 20% discretionary relief as well.
A non profit making organisation may also qualify for relief, however town or parish councils would not qualify for discretionary relief. The regulations state that excepted hereditaments cannot qualify for relief, these include those occupied by precepting authorities which includes town and parish councils. Discretionary relied cannot be awarded in respect of any properties where Cornwall Council, town or parish councils are in occupation.
There are claim forms which need to be completed to make an application for relief and these should be submitted to the billing authority.
If a property is empty, the owner or leaseholder will usually still pay rates after a period of exemption has lapsed. The period of exemption covers the first three months that the property is empty. For warehouses or industrial premises the exemption period is six months.
5. HOW IS THE BILL CALCULATED?
The rates bill is calculated by applying the uniform business rate set annually by the Government to the rateable value shown for an individual property in the rating list for the billing authority.
6. WHAT IS THE UNIFORM BUSINESS RATE?
For 20011/2012 the Government has set 43.3 pence in the pound.
7. AN EXAMPLE
Rateable value £2000 @ 43.3pence in the £ gives a liability for 2011/2012 of £866.
8. HOW IS THE RATEABLE VALUE ARRIVED AT?
The rateable value is based on a notional annual rental value of the property assessed on property values at a date set by the Government - current rateable values have been set by reference to values as at 1st April 2008.
The current rateable values came into force on 1st April 2010 and will run until 31st March 2015.
9. WHO DECIDES ON THE RATEABLE VALUE?
Rateable values are published in the rating lists for each billing authority and are assessed by the Valuation Office Agency (part of HM Revenue and Customs).The rating lists can be seen on the internet at www.voa.gov.uk.
10. CAN WE APPEAL AGAINST RATEABLE VALUES?
Yes, if it is felt that the rateable value is too high or incorrect due to physical change in the property or change in the use of the property a rating assessment can be appealed.
Town and parish councils should be aware that “cowboy” firms operate in the field of rating appeals. Their usual method is to get an occupier to sign up to a rating appeal, pay an upfront fee and then the firm disappears, never to be heard of again. Approaches such as these should be declined. The Council’s policy is for rating matters to be dealt with in-house by their rating team and this service can also be offered to town and parish councils for a small fee. Any concerns or enquiries should be addressed to the team as detailed at 15.below.
11. DO RATEABLE VALUES CHANGE?
Yes.
New rating lists are compiled every 5 years and during the 5 year life of each list rateable values will alter to take account of physical changes to properties e.g. extensions or demolitions.
Newly built properties also needed to be added to the list and attract liability from the date they come into use.
12. WHAT HAPPENS WHEN NEW RATING LISTS ARE DUE?
New rating lists are compiled every 5 years. The current list, compiled by the Valuation Office Agency came into force on the 1st April 2010 and the new rateable values are based on property values as at 1st April 2008. The new list takes into account changes in property values since the last valuation date of 1st April 2003 and hence rateable values have increased considerably.
13. WILL THE INCREASED RATEABLE VALUES RESULT IN HIGHER BILLS?
The Government’s stated aim is for increases in rateable values to be offset by a lower uniform business rate so that the revaluation exercise is revenue neutral. However there are always some winners and some losers too as a result of revaluations. However, there is a transitional relief scheme which is designed to limit, or phase in, the amount of upward or indeed downward liability hence limiting the amount by which a rate bill can change year on year following a revaluation. Town and parish councils would still benefit from this scheme provided the property is still in transition at the time of transfer, however, many properties are now coming to the end of the transition stage.
14. THE GOVERNMENT SAYS IT IS HELPING RATEPAYERS WITH THEIR BILLS - DOES THIS AFFECT US?
Small business rate relief could apply to town and parish councils.
This relief is only available to ratepayers who apply to their local authority and who occupy either –
(a) One property
(b) One main property and other additional properties providing those additional properties each have a rateable value which does not exceed £2,599.
The rateable value of the property mentioned in (a), or the aggregate rateable value of all the properties mentioned in (b), must not exceed £17,999. If the rateable value, or aggregate rateable value, increases above those levels, relief will cease from the day of the increase.
Ratepayers who satisfy these conditions will have the bill for their sole or main property calculated using the lower small business non-domestic rating multiplier rather than the national non-domestic rating multiplier that is used to calculate the liability of other businesses.
In addition, if the sole or main property is shown on the rating list with a rateable value which does not exceed £6,000, the ratepayer will receive a percentage reduction in their rates bill for this property of 50%. For a property with a rateable value of £6001, - £11,999 the reduction is on a sliding scale from 50% to 0%. This scheme is currently in operation until September 2012 after which time the thresholds may be changed.
If an application for relief is granted, provided the ratepayer continues to satisfy the conditions for relief which apply at the relevant time as regards the property and the ratepayer, they will not need to re-apply for relief in each new valuation period.
Certain changes in circumstances will need to be notified to the local authority by the ratepayer (other changes will be picked up by the local authority). The changes which must be notified are:
(a) The ratepayer taking up occupation of a property they did not occupy at the time of making their application for relief, and
(b) An increase in the rateable value of a property occupied by the ratepayer in an area other than the area of the local authority which granted the relief.
Notification of these changes must be given to the local authority within 4 weeks of the day after the day on which the change happened. If this happens, there will be no interruption to the ratepayer’s entitlement to the relief. A notification that the ratepayer has taken up occupation of an additional property must be by way of a fresh application for relief; notice of an increase in rateable value must be given in writing.
15. WHO CAN GIVE ADVICE?
The rating valuer for Cornwall Council is:
Karen Potter
Property Services, Liskeard Business Centre, 1 Holman Road, Liskeard Cornwall, PL14 4UT
Tel: 01579 324190
E-mail: