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Our video help is here to assist you in understand how the Valuation Office Agency works out your rating assessment.
How your bill is calculated (3 mins)
A clear demonstration of what is used to work out what you actually pay in business rates.
Normally around March each year – and to coincide with the start of the financial year – local councils send out their annual business rate bills. A lot of people ask how their bill is calculated. So perhaps I can give you a quick explanation. Basically your bill is calculated from three key elements; first, the rateable value as set by the VOA; second, the national multiplier set by central government and third, any reliefs which are regulated by central government but applied by the local council.
Let′s take the rateable value first. This is the VOA′s assessment of the annual rental value of a property on a set date – currently 1st April 2008 – there are other videos on this website explaining how we work out rateable values on different types of property.
Now to the national multiplier. This is reduced following a revaluation to ensure that the total national yield from business rates stays the same – and then only changes each year in line with inflation. The multiplier represents the number of pence in each pound of rateable value that will be payable in business rates before any reliefs are applied. So, for example, if your rateable value is £10,000 and the multiplier is 41.3 pence, then bill total before reliefs would be £4,130.
The Government does not collect any extra revenue as a result of this revaluation – the purpose is simply to maintain fairness in the rating system by redistributing the total national rates bill, taking into account any relative changes in property values over time.You can check the current multipliers for England and Wales in the help section of this website.
Lastly there are reliefs, the most common of which are Transitional Relief and Small Business Rate Relief. You can look on your local council′s website to see what kind of reliefs you may be eligible to claim. Also, if you already know your rateable value, you can get an indication of your likely bill by following the relevant links on the businesslink.gov.uk website to see for yourself.
How we value pubs (2 mins)
To get a fair valuation of pubs, we look at trade levels. This video shows what we take into account.
If you run a pub, then your rateable value is worked out by using a receipts based approach. With shops, for example, we work out the rateable value by first gathering rental evidence from a variety of similar properties and then relate this to the size and other features of the property. With pubs we have to use a slightly different approach to reach an annual rental value, which is the basis for rateable value. This is because the rental value for this type of business is based on its potential turnover. You can find a fuller definition of rateable value in the help section of this website. So here′s what we do. We collect information from occupiers about their trading receipts and trading patterns. We then use this to establish a level of ‘fair maintainable trade’ on the particular valuation date.
As you may know, fair maintainable trade is the valuation method most commonly used in the marketplace to determine pub rents. We use this system so we can fairly and consistently calculate the rateable values of businesses like yours. Once this level of fair maintainable trade is determined, we apply a percentage established from the analysis of rents paid for similar properties to work out the rateable value. You can see the percentage ranges we use in the Approved Guide to the Valuation of Public Houses which we have agreed with the British Beer and Pub Association. You′ll find a copy of the Guide in the help section of this website.
How we value using rents (2 mins)
This video explains how most properties - shops, offices, industrial premises and so on - are valued using rents. See how.
Like me, have you wondered how the VOA decides on the rateable value for your property?
Well, it′s pretty straightforward really. It′s all based on annual rental value. The VOA works out the annual rental value of your shop, office, warehouse or whatever as if it could have been let on the open market on 1st April 2008. This is regardless of whether you own or rent the property. This becomes the rateable value. And to do this the VOA collect as much evidence as they can of actual agreed rents around this valuation date, making adjustments for lease terms like responsibility for repairs and insurance and for rent free periods, along with changes in the market over time. And if some parts of the property are more valuable in rental terms than others for example a storeroom is less valuable than an office – this is taken into account as well.
All this ensures that everything is done in a fair and consistent way and gives the VOA a good picture of the level of rents being paid in an area for different types of property – all broken down to £s per square metres From this they can decide the rental value per square metre that should be used to value each property. It′s then just a simple matter of multiplying the rental value per square metre by the size of the property – taking into account again that some parts are more or less valuable – to give the total rental value which is used as a rateable value Job done. Of course, it′s a lot more involved for the professionally qualified surveyors who work for the VOA and do these valuations, but at least this gives you an idea of how it works.
How we measure your property (2 mins)
A look at what we take into account to get the right measurements for your property.
How exactly does the VOA measure your property?
Well, for a start, you can be assured that the measurement complies with the Royal Institution of Chartered Surveyors code. And, as the largest employer of surveyors in the country, our staff are professionally trained and equipped with the latest technology to ensure accuracy and consistency at all times. As for the measuring of non-domestic premises, we use two methods – the net internal area, or NIA most commonly used for measuring shops and offices – and the gross internal area, or GIA, used for industrial areas.
The method of measurement used does not make the rateable value any higher or lower as the same consistent method of measurement is used throughout the valuation process for the same property type.
Starting with NIA, this measures the usable area within a building, and excludes such things as toilets, cleaning cupboards, columns, stairwells and the like. You′ll find that most small and medium sized offices and shops are measured using the NIA method.
GIA on the other hand measures the whole enclosed area of the building within the external walls, including internal walls and partitions, WCs, columns, lift wells, stairwells and so on, but doesn′t include outside areas such as balconies, terraces, fire escapes, parking areas and anywhere with a ceiling height of less than one and a half meters. Quite often we will divide up the overall GIA so that we have separate measurements for part of the building that are of different qualities and put to different uses. For example, we will generally show separately the production area and administrative offices within a factory. If yours is a retail property, it′s also worth viewing our Zoning video on this site.
How zoning works (2 mins)
Confused by zone A, zone B etc? This video explains it really simply.
When I received my valuation from the VOA, I couldn′t understand why they were saying my shop had zone A, zone B and so on. So I called them up and now I′ve spoken to them, it makes good sense. So let me explain. We all know that anything which either helps or limits your sales – like the size or shape of the shop – will have an influence on its rental value. Well, the VOA uses what is called zoning to take these sorts of factors into account – and in fact it′s the standard way in which shops are looked at for rental valuation generally. Look at it this way – see my shop window? That′s the most valuable area. I use it to attract customers and to show them what I′ve got to offer. So the front of my shop is zone A.
Generally speaking, each zone covers the width of your shop and goes back to a to a depth of 6.1 metres, or 20 feet in old money. Now come inside and see the middle of my shop floor. Now I′ve got a lot of stock here, but people already have to be inside to see it and so it′s not such valuable space. So this is called zone B and is half as valuable as zone A. And see this area at the back where I keep odds and remnants? That attracts the least customers, so that′s zone C and is half as valuable again as zone B. If your shop extends further back than zone C – i.e. more than 18.3 metres – this is usually classed as the remainder and it′s half the value of C. Well that was all quite simple, but by using zoning the VOA can take account of all the different sizes and shapes of shops when looking at rental valuations. Further details on how the VOA measures can be found in a separate video on this website entitled ‘How we measure’.
Of course zoning isn′t used for all shops. For example, big supermarkets or department stores are valued at an overall price per square metre. But zoning is used for high street shops like mine, including hairdressing salons, most restaurants, betting shops and banks. And that′s basically all there is to zoning. Makes sense, doesn′t it?