There has been a great deal of controversy surrounding the new valuation list for non-domestic rates which took effect on 1 April 2017.
The forthcoming changes do not affect existing exemptions and reliefs available to rural landowners and occupiers. Agricultural land and buildings remain exempt for non-domestic rates. The agricultural exemption does not, however, extend to land occupied with a house as a park, gardens, pleasure grounds or land used for sport or recreation or as a racecourse.
Rural rate relief is available to businesses in a rural area with a population of below 3,000. A 50% reduction in non-domestic rates is available to businesses which are:
- the only village shop or post office with a rateable value of up to £8,500; and
- the only public house or petrol station with a rateable value of up to £12,500.
The Chancellor announced in the Autumn Statement that local councils can top up the mandatory 50% relief to 100%.
Empty buildings benefit from temporary exemptions. Empty shops and offices have the benefit of an exemption from rates for three months, and industrial premises benefit for six months. However, premises will be temporarily removed from the rating list whilst they are incapable of being occupied, and the range of circumstances for which this applies are narrow.
Premises undergoing refurbishment works are generally considered to be capable of beneficial occupation. A recent Supreme Court decision (Newbigin v SJ&J Monk ) dealt with the treatment of premises undergoing refurbishment. The case dealt with two competing principles in rating law:
- firstly, the valuation for rating assumes that the premises are in a state of reasonable repair; and
- secondly, the ‘reality principle’ that the property is to be valued on how it existed on the date of valuation.
Thankfully, for the rate payer, the reality principle is not displaced when premises undergoing refurbishment are valued, and as a consequence, the rateable value during substantial refurbishment works may be reduced.
The new valuation is based on the yearly rental value of land as at 1 April 2015, and so there will be winners and losers. Transitional provisions will cushion the effect of substantial hikes and reductions in bills over a period of five years.
For some rural businesses and activities, the rental method of valuation for rating is not suitable as there is insufficient comparable rental evidence, and the commercial activity on a land may be sporadic. In such cases, a method of valuation based on the receipts and expenditure of the business or activity is likely to be more appropriate.
Owners and occupiers who believe that the new rateable value is incorrect should seek advice from a surveyor specialising in rating valuations. They will generally charge a ‘success fee’ based on a modest percentage of the saving achieved. We can recommend surveyors who are experts in this field. It makes sense to challenge the rateable value as soon as possible because the assessed rates are payable until such time as the rating list is actually amended, and this takes time. Time limits apply to the new challenge so that is a further key reason not to delay taking advice.