October 2, 2022

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Valuation Office Agency-Business Rates Valuation

The valuation agency business rates valuation is an assessment of the property’s current worth. It is often used when transferring a property from one owner to another. Business rates value the property and then transfer it to the new owner with a variable rate of return.

This article has been prepared for general information purposes only and does not form part of any offer or contract. We cannot guarantee that every question raised in this document will be answered by the Valuation Office Agency or their agents, or indeed be relevant to your circumstances.

The following is provided on this basis alone as advice relating to our clients’ interests. Whilst every effort is made to ensure that this information is accurate and current, it is possible that laws and tax regulations may have changed since the date of publication. If so, the information will not reflect these changes. In any such case, please seek professional advice to ensure your interests are protected.-

Complex Matter

Valuing commercial property for business rates valuation is a complex matter. Business rates valuation for non-domestic properties is determined by applying a multiplier known as the multiplier rate to the rated value of the property. This article explains how business rates are calculated, returns on business premises and statutory office premises, and how they are allocated to employees. The article also explains what can be deducted from taxable profits to reduce your liability in some circumstances.

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The rateable values of non-domestic properties are assessed and maintained by the Valuation Office Agency (VOA). The VOA publishes a list of all rateable values, known as the open market rent multi-occupancy list, at regular intervals. Business rates valuation is based on the open market rental value. A business rates valuation is an assessment of the property’s value. It is often used when transferring a property from one owner to another. When a property changes ownership it is revalued and new requisitions are issued to levy charges for business rates valuation on the basis of this new valuation period. Generally, the new owner will pay business rates on the basis of a rateable value that is the same or less than that which was previously applied.

Business Rates Valuation

Business rates valuation is used to determine the amount of business rates payable for a property in Great Britain. The valuation includes any building costs, deducted from its taxable profits. The tax free Income and corporation tax allowance may also be deducted from taxable profits to reduce the liability for business rates. Some users of automatic billing systems use the open market rental value as a guide to setting basebanded charges.

This article has been prepared for general information purposes only and does not form part of any offer or contract. We cannot guarantee that every question raised in this document will be answered by the Valuation Office Agency or their agents, or indeed be relevant to your circumstances.

Under the terms of the British Business Property (Rate Reliefs) Bill 2009, rates on new and existing buildings are being reduced. The bill is designed to encourage investment and help grow the economy and create more jobs by encouraging more businesses to move into the UK. It will also reduce the cost of business premises for those companies that currently have to pay business rates on their premises.

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The bill has an impact on both domestic buildings and commercial property, which includes non-domestic properties like office buildings and warehouses.

Guide to How Much Business Rates

The rateable value of a commercial property is the current guide to how much business rates are payable on the property per annum. The rating band is the maximum rateable value that a particular building can have – for example, if a building is rated at £500,000, its rating band would be £500,000. For example, if you rent a property which has a rateable value of £700,000 then your chargeable amount would be:

Where: b = annual business rates payable on properties with the same rating (in this case b = 0.6)

The chargeable amount for business premises is determined by multiplying this by the multiplier (1.5) and then adding any allowances.

Conclusion

The rateable value of a property is determined under the Valuation Office Agency Act 1992. The valuation includes any building costs, deducted from its taxable profits. The tax free Income and corporation tax allowance may also be deducted from taxable profits to reduce the liability for business rates. Some users of automatic billing systems use the open market rental value as a guide to setting basebanded charges.