1 April 2000 is the date of a rating revaluation of all non-domestic property in Scotland, England and Wales. In Scotland the work for this was undertaken by the Assessors for each of the valuation areas, which consist of combinations of local authority areas.
Revaluation results in the production of a new Valuation Roll which contains revised rateable values for all non-domestic properties in Scotland.
The key aims of the revaluation are maintaining stability and certainty for business and the continuation of harmonisation of valuation treatment and practice, north and south of the border. The non-domestic rate income that will be raised from businesses in Scotland after the revaluation will be the same in real terms as before. The purpose of the Revaluation is to update rateable values on non-domestic properties to reflect more up-to-date rental levels. This creates a closer, fairer link between modern property values and the amount of rates payable by individual ratepayers.
There are two factors which are used to calculate the bill of every non-domestic ratepayer: the rateable value (RV) of the property and the non-domestic rate or rate poundage.
The rateable value of every property is determined by the appropriate Assessor, who is independent of both local and central Government. The rateable value is the Assessor's estimate of the annual rent which that property would command on the open market. The methods used to value property have been subject to harmonisation between Scotland, England and Wales.
The non-domestic rate poundage has been set at 45.8 pence for the year 1 April 2000-31 March 2001. To calculate the rates bill for your property, you should multiply the rateable value by the rate poundage but remember that your rates bill will be affected if you are subject to the transitional provisions, details of which are included in this leaflet. A 1 penny discount on the rate poundage for small lands and heritages, with rateable value of £10,000 or less for the year 2000-01, was announced by the Minister for Finance, Jack McConnell, on 8 December 1999.
In March you will have received a Valuation Notice from your Assessor stating the rateable value for your property with effect from 1 April 2000, the date of the revaluation of all non-domestic property. This rateable value which, generally speaking, will apply until the next revaluation, scheduled for 2005, reflects rental levels as at 1 April 1998.
Following the revaluation those businesses whose rateable values increase by more than the Scottish average will be faced with increases in their bills and some may be significant. The aim of transitional arrangements is to protect such businesses from sudden sharp increases in their bills in the period immediately following the revaluation, allowing them time to plan to accommodate the true bill over a longer period.
The scheme aims to combine simplicity with tight initial protection for those faced with significant real increases in bills. It limits increases in bills to 5% in real terms for small subjects (ie. those with a rateable value of £10,000 or less) and 7.5% in real terms for all other subjects and limits the decrease in bills of all ratepayers to 5% in real terms.
This leaflet contains examples of how transitional arrangements and rates bills can be calculated under this scheme for the year 2000-01 and the phasing in of the true bill over the 4 year period for which the scheme is to last.
The scheme strikes a balance between the need to give businesses time to plan for the change in bill following revaluation, and the need to ensure that businesses are paying a bill based on their true rateable value as soon as practical after the revaluation.
The appropriate factors to be applied are as follows:
Where a property has a rateable value at 1 April 2000 of over £10,000 the factor is 1.087 derived from the 7.5 per cent increase and the 1.1 per cent change in the Retail Price Index representing inflation, ie. 1.075 x 1.011 = 1.087.
Where a property has a rateable value at 1 April 2000 of £10,000 or less the factor is 1.062 derived from the 5 per cent increase and the 1.1 per cent change in the Retail Price Index, ie. 1.05 x 1.011 = 1.062.
For all ratepayers the factor for decreases is 0.96 derived from the 5 per cent maximum decrease and the 1.1 per cent change in the Retail Price Index representing inflation, ie. 0.95 x 1.011 = 0.96.
These are illustrative only and are based on the fairly arbitrary assumption that poundage increases by 2.5 per cent each year. The scheme is illustrated with a 7.5 per cent limit for the real increase and 5% limit for the real decrease in bills between 1999-00 and 2000-01 and a rateable value in 1999-00 of £20,000.
With these assumptions the poundage for all businesses whose rateable value remains above £10,000 would be:
|
1999-00 |
2000-01 |
2001-02 |
2002-03 |
2003-04 |
2004-05 |
|
|
Inflation |
1.1 |
2.5 |
2.5 |
2.5 |
2.5 |
|
|
Poundage |
48.9 |
45.8 |
46.9 |
48.1 |
49.3 |
50.6 |
Rateable value in 1999-00 of £20,000
Bill in 1999-00 of £9,780 (£20,000 x 48.9p)
Rateable value in 2000-01 of £22,000
Bill in 2000-01 of £10,076 (£22,000 x 45.8p)
This is a 1.9% increase in bill, in real terms (after an inflation factor of 1.011 is applied to the 1999 bill to give a notional figure of £9,888)
Therefore no TR in any year.
Rateable value in 1999-00 of £20,000
Bill in 1999-00 of £9,780 (£20,000 x 48.9p)
Rateable value in 2000-01 of £20,600
Bill in 2000-01 of £9,435 (£20,600 x 45.8p)
This is a 4.6% decrease in bill, in real terms (after an inflation factor of 1.011 is applied to the 1999 bill)
Therefore no TR
Rateable value in 1999-00 of £20,000
Bill in 1999-00 of £9,780 (£20,000 x 48.9p)
Rateable value in 2000-01 of £23,750
Bill in 2000-01 of £10,878 (£23,750 x 45.8p)
This is a 10% increase in bill, in real terms (after an inflation factor of 1.011 is applied to the 1999 bill)
Therefore TR.
In year 1 (2000-01), the bill is limited to a 7.5 per cent real increase in bill. This is £10,631. (9,780 x 1.087)
In 2000-01, TR is £10,878 - £10,631 = £247
In 2001-02, TR is TR in 2000-01 (in 2001-02 terms) x 3/4 = £247 x (46.9/45.8) x 3/4 = £190
In 2002-03, TR is TR in 2000-01 (in 2002-03 terms) x 1/2 = £247 x (48.1/45.8) x 1/2 = £130
In 2003-04, TR is TR in 2000-01 (in 2003-04 terms) x 1/4 = £247 x (49.3/45.8) x 1/4 = £66
In 2004-05, TR is zero.
2000-01 £10,631
2001-02 £23,750 x 0.469 - £190 = £10,949
2002-03 £23,750 x 0.481 - £130 = £11,294
2003-04 £23,750 x 0.493 - £66 = £11,643
2004-05 £23,750 x 0.506 - £0 = £12,018
Rateable value in 1999-00 of £20,000
Bill in 1999-00 of £9,780 (£20,000 x 48.9p)
Rateable value in 2000-01 of £43,200
Bill in 2000-01 of £19,786 (£43,200 x 45.8p)
This is a 100% increase in bill, in real terms (after an inflation factor of 1.011 is applied to the 1999 bill)
In year 1 (2000-01), the bill is limited to a 7.5 per cent real increase in bill. This is £10,631. (9,780 x 1.087)
In 2000-01, TR is £19,786 - £10,631 = £9,155
In 2001-02, TR is TR in 2000-01 (in 2001-02 terms) x 3/4 = £9155 x (46.9 / 45.8) x 3/4 = £7031
In 2002-03, TR is TR in 2000-01 (in 2002-03 terms) x 1/2 = £9155 x (48.1/45.8) x 1/2 = £4807
In 2003-04, TR is TR in 2000-01 (in 2003-04 terms) x 1/4 = £9155 x (49.3 / 45.8) x 1/4 = £2464
In 2004-05, TR is zero.
2000-01 £10,631
2001-02 £43,200 x 0.469 - £7,031 = £13,230
2002-03 £43,200 x 0.481 - £4,807 = £15,972
2003-04 £43,200 x 0.493 - £2,464 = £18,834
2004-05 £43,200 x 0.506 - £0 = £21,859
Rateable value in 1999/00 of £20,000.
Bill in 1999/00 of £9,780 (£20,000 x 48.9p)
Rateable value in 2000/01 of £19,450.
Bill in 2000/01 of £8,908 (£19,450 x 45.8p)
This is a 10% decrease in bill, in real terms (after an inflation factor of 1.011 is applied to the 1999 bill)
Therefore TR
In year 1 (2000/01), the bill is limited to a 5 per cent real decrease in bill. This is £9,389 (9,780 x 0.96).
In 2000/01, TR is £8,908 - £9,389 = - £481
In 2001/02, TR is TR in 2000/01 (in 2001/02 terms) x 3/4 = - £481 x (46.9 / 45.8) x 3/4 = -£369
In 2002/03, TR is TR in 2000/01 (in 2002/03 terms) x 1/2 = - £481 x (48.1 / 45.8)x 1/2 = -£253
In 2003/04,TR is TR in 2000/01 (in 2003/04 terms) x 1/4 = - £481 x (49.3 / 45.8) x 1/4 = -£129
In 2004/05,TR is zero.
2000/01 £9,389
2001/02 £19,450 x 0.469 + £369 = £9,491
2002/03 £19,450 x 0.481 + £253 = £9,608
2003/04 £19,450 x 0.493 + £129 = £9,718
2004/05 £19,450 x 0.506 + £0 = £9,842
The transitional bill would be recalculated to reflect the result of a successful appeal against the 1 April 2000 valuation.
Where a property increases in value from a date after 1 April 2000 as a result of a material change of circumstance, ie. not as a result of revaluation, no phasing arrangements will apply to the additional rates arising. The increase in rates will be added in full to the notional rates bill from the date of the increase in rateable value. Where transition applies and the value of a property decreases from a date after 1 April 2000 the rates bill will be reduced in proportion to the decrease in the actual rates bill.
The scheme will apply in respect of properties which, with effect from 1 April 2000, are merged or split into separate subjects and which are formed from an entry in the valuation roll at 31 March 2000. Special rules will apply.
Property in transition will continue in transition on a change of ownership or occupation.
Where a property was in transition from the 1995 Revaluation at 31 March 2000, its "Base Liability" will be prescribed in terms of the Annualised Daily Rates Bill payable at 31 March 2000.
If a property has been empty at 1 April 2000 for a period of at least three months and providing it is not one of the classes of property exempt from the empty rate it will attract the national non-domestic rate for 2000-01 at 50 per cent of the normal rate for so long as it remains unoccupied. If the property is unoccupied and subject to transition the transitional rates bill will be 50 per cent of what would otherwise be payable if the property had been occupied.
Where a ratepayer is entitled to a mandatory or a discretionary relief of rates payable for year 2000-01 the level of relief will be applied to the transitional rates bill.
Why has the rateable value of my property increased ?
A general revaluation of non-domestic property takes effect from 1 April 2000. Your new rateable value represents the rent which your property could be expected to command using the levels of rents prevailing at 1 April 1998, whereas your previous rateable value was based on 1993 rental levels.
Do I pay more because my rateable value has increased ?
Not necessarily; this will depend on the combined effect of changes in rateable value and differences between the new national non-domestic rate and the poundages in force in 1999-00. The Scottish Executive is aware that any unexpected significant increase in overheads can be damaging for businesses. It has therefore been decided to phase in any significant increase in a non-domestic rates bill which results from revaluation by limiting the extent to which the 2000-01 rates bill can increase.
Do I have to apply for the phasing arrangements to be applied ?
No. If the phasing arrangements should apply in respect of your property they should be automatically taken into account in the calculation of your non-domestic rate bill, the details of which will be included in the rate demand note which you receive from your local authority. If you disagree with the basis of calculation of your bill you should contact your local authority.
What happens if my rateable value is decreased on appeal ?
If you appeal successfully against the level of rateable value at revaluation the amended rateable value will be backdated to 1 April 2000. The rating authority will require to recalculate your rates liability, including redetermination of any transitional arrangements. If you have overpaid interest may be payable by the local authority on the amount refunded.
Do I qualify for transition if I occupy a property for the first time after 1 April 2000 ?
Yes. The scheme is designed to protect ratepayers from sizeable increases in non-domestic rate bills resulting from revaluation.
If the property is entitled to relief at 1 April 2000 then you will share this relief for the number of days that you are charged rates.
Your local authority non-domestic rates section will be happy to answer any queries which you may have.
Alternatively you can contact the Scottish Executive's Non-domestic Rates Section, Area 3-J, Victoria Quay, Edinburgh EH6 6QQ.
Telephone : 0131-244-7051/0131-244-7005.
Fax :0131-244-7058. Email: stephen.orr@scotland.gov.uk
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