Business Rates in England and Wales

Business Rates In England And Wales

Business rates is the commonly used name of non-domestic rates, a tax on the occupation of non-domestic property. Rates are a property tax with ancient roots that was formerly used to fund local services that was formalised with the Poor Law 1572 and superseded by the Poor Law of 1601. The Local Government Finance Act 1988 introduced business rates in England and Wales from 1990, repealing its immediate predecessor, the General Rate Act 1967. The act also introduced business rates in Scotland, but as an amendment to the existing system which had evolved separately to that in the rest of Great Britain. Since the establishment, in 1997, of a Welsh Assembly Government able to pass secondary legislation, the English and Welsh systems have been able to diverge.

The Local Government Finance Act 1988, with follow-up legislation, provided a fresh administrative framework for assessing and billing, but did not redefine the legal unit of property, the hereditament, that had been developed through rating case law. Properties are assessed in a rating list with a rateable value, a valuation of their annual rental value on a fixed valuation date using assumptions fixed by statute. Rating lists are created and maintained by the Valuation Office Agency, a UK Government Executive Agency. Rating lists can be altered either to reflect changes in properties, or as valuations are appealed against; new valuation lists are created every five years.

Billing and collection is the responsibility of the local authorities who are funded by the tax, but rather than receipts being retained directly, they are pooled centrally and then are redistributed. The rateable value is multiplied by a centrally-set fraction to produce the annual bill; a number of reliefs are available, such as those for charities and small businesses. In 2005/06, £19.9 billion was collected in business rates, representing 4.35% of the total UK tax income.