Business rates in England

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.

[2] 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.

The other half kept by local authorities are then subjected to tariff, levy, top-up and safety payments depending on the financial position of the council.

According to the government the change gives financial incentives to councils to grow their local economies and increase their income from business rates.

This was a local tax in England and Wales on both domestic and non-domestic property and was based on rental values.

Previously, local authorities had decided what proportion of rateable values to charge; the new system featured a centrally set multiplier, often referred to as the Uniform Business Rate, by which the basic bill was calculated.

While in many ways similar, key underlying concepts in the Scottish system differed, as did the administrative scheme.

[14] During the introduction of business rates, criticism focused on the level of the multiplier to be chosen, and on the transitional relief scheme, with organisations such as the Confederation of British Industry calling for a lower multiplier and a relief scheme more to the benefit of its members.

[15] In 2007, the Lyons Inquiry into Local Government said there was no significant opposition to the principles of the tax, but that the level was a concern to property-intensive businesses.

For each property in the rating list for their area, the local authority calculates and issues a bill, which it is responsible for collecting, with powers to pursue payment.

The property must also be used wholly or mainly for charitable purposes, and the criteria set out in the Local Government Finance Act 1988 must also be met.

The criteria for eligibility are not straightforward and there is some case law, especially in relation to charity shops, which provides guidance.

[33][36][37] In the Pre-Budget Report 2008, the Chancellor increased the rateable value for full relief to £15,000 for the period 1 April 2009 to 31 March 2010.

The only public house or petrol station (with rateable values of up £10,500, as of 2005) in a settlement may also receive the relief, which is a mandatory 50%.

Discretionary relief of up to 100% is available for the previous properties, and for any others up to a current limit of £12000 rateable value, provided they are judged to be of benefit to the local community.

[42] In England, the rating list that came into force on 1 April 2005 featured a new relief designed to benefit small businesses.

A bill to make the application of the relief mandatory was not passed into legislation although it would have led to a greater take-up of this assistance.

[43][44][45] To fund the relief in England, a supplement is added to the Uniform Business Rate multiplier.

On revaluation, the multiplier is adjusted so that the overall increase in liability across the country is in line with the Retail Prices Index, a measure of inflation.

A property whose rateable value changes exactly in line with the national average would see an inflation-only rise in liability.

To smooth these jumps in liability, schemes of transitional relief have been applied to each rating list.

[49] The Local Government Act 2003 required that all revaluations in England feature a revenue-neutral scheme, beginning with the 2005 rating list.

Assessing a rateable value requires a valuation that follows the above process, but the matters to be considered are constrained by legislation.

[61][62] It appears that it was the intention of the drafters of the Local Government Finance Act 1988[12] that the previous assumption of 'reasonable repair' would continue in the new system.

However, a successful legal challenge at the Lands Tribunal (Benjamin (VO) v Anston Properties Ltd [1998][63]) showed that they had in fact failed to include it in the legislation.

For certain properties, including mines, quarries and landfill sites, the quantity of minerals, wastes, or other substances deposited on or remaining in the land are taken into account.

The Local Government Finance Act 1988 specifically retained[69][70] the definition of hereditament from the General Rate Act 1967: "hereditament" means property which is or may become liable to a rate, being a unit of such property which is, or would fall to be, shown as a separate item in the valuation list.

The statutes contain no definition, but the practice, which has prevailed for many years past, warrants the following general rules Where two or more properties are within the same curtilage or contiguous to one another, and are in the same occupation, they are as a general rule to be treated for rating purposes as if they formed parts of a single hereditament.

Gilbert v Hickinbottom featured an exception to the general rule, where there were two properties in the same occupation, separated by a public highway.

The Local Government Finance Act 1988 gives broad authorisation for regulations to be made about alterations,[94] which can include alterations by the Valuation Office Agency to maintain the list accurately, or proposals by interested parties to change the list.