Have you ever opened your business rates bill and wondered who decided how much you should pay or why the amount changes over time? If you own or occupy a commercial property in England or Wales, then the amount you pay in business rates is largely shaped by the work of the Valuation Office Agency (VOA). While your local council is responsible for collecting the business rates, it is the VOA that determines the property’s rateable value, which forms the basis of your bill.
This system is not always straightforward, and many business owners find themselves confused by how valuations are made, when they are updated, and what can be done if they seem unfair. With over two million non-domestic properties currently rated, and a new revaluation due in 2026, understanding how this process works is essential.
This guide explains how the VOA determines business rates, what methods are used, how bills are calculated, and what steps businesses can take if they think something is wrong. It also looks ahead to what’s coming with the next revaluation and includes real examples and statistics that provide valuable context for any UK business.
What Is the Valuation Office Agency and What Does It Do?
The Valuation Office Agency, part of HM Revenue and Customs, is responsible for setting the rateable values of business properties across England and Wales. A property’s rateable value is essentially an estimate of how much rent it could earn on the open market on a specific valuation date. For the current 2023 rating list, that date is 1 April 2021.
Local authorities use the rateable value set by the VOA to calculate business rates, multiplying it by a government-set figure called the multiplier. Although councils collect the actual payments, they rely entirely on the VOA’s assessments to issue accurate bills.
This separation ensures that valuations remain standardised, objective, and based on nationwide valuation principles rather than local discretion. It’s also designed to make the process transparent and rooted in market data.
How Does the VOA Value Business Properties?
The method the VOA uses to value a property depends largely on the type of premises and the availability of market data. To ensure fairness and consistency, it follows recognised professional standards, notably those approved by the Royal Institution of Chartered Surveyors (RICS).
In most cases, properties such as shops, offices, and light industrial units are valued using rental comparison. This involves analysing rent prices for similar properties in the local area and then applying adjustments based on size, location, layout, and condition. Where market rental data is limited or unavailable, especially for specialist properties, the VOA uses alternative methods.
For example, larger hotels and leisure centres are often valued using the receipts and expenditure method, where the income and costs of the business are analysed to calculate what rent a hypothetical tenant might pay.
In cases where neither rental evidence nor trading accounts exist, such as schools, fire stations, or hospitals, the VOA applies the contractor’s basis. This involves estimating the cost to build a similar facility today and applying depreciation to arrive at a notional rent.
This careful selection of valuation methods helps the VOA to provide fair assessments across very different sectors.
How Are Business Rates Calculated After Valuation?
Once the VOA assigns a rateable value to a property, your local council applies a multiplier to determine the total business rates payable. The multiplier is set annually by the central government and is expressed in pence per pound of rateable value.
There are two different multipliers in England: the standard multiplier, and the small business multiplier, which applies to properties with a rateable value of less than £51,000. The multiplier is reviewed each financial year, and adjustments may be made for inflation or government policy.
Example of Business Rates Calculation
| Property Type | Rateable Value | Multiplier (2023/24) | Business Rates Payable |
|---|---|---|---|
| Small café | £12,000 | 49.9p | £5,988 |
| High street clothing shop | £52,000 | 51.2p | £26,624 |
| Office building | £150,000 | 51.2p | £76,800 |
This is the base amount before any reliefs or exemptions are applied. The final payable figure may be reduced if the business qualifies for support schemes such as Small Business Rate Relief, Rural Rate Relief, or Charitable Rate Relief.
What Is a Revaluation and How Often Does It Happen?
A revaluation is the process through which the VOA updates the rateable values of all non-domestic properties. These updates are essential because property markets change over time, and the government needs to ensure that business rates reflect the current rental values.
The latest revaluation came into effect on 1 April 2023, using data from 1 April 2021. This valuation snapshot date was chosen to provide a fair and consistent benchmark for all properties across the country.
The next revaluation will take place in April 2026, based on values from 1 April 2024. This shortened three-year cycle aims to make the system more responsive and accurate.
Importantly, a change in your property’s rateable value during revaluation does not necessarily mean a change in your business rates bill. The government often adjusts the multiplier to balance the overall rates collected across all properties.
However, some sectors or regions may still experience rises or reductions based on local market conditions.
Can a Property’s Rateable Value Change Between Revaluations?
Although revaluations are periodic, rateable values can be updated in between those cycles if there are significant changes to the property or its use.
If a property undergoes physical changes such as an extension, partitioning of internal space, or conversion of use, for example, turning part of a warehouse into offices, the VOA must be informed. These changes could increase or decrease the rateable value depending on their impact on potential rental income.
Additionally, temporary disruptions such as roadworks, flooding, or construction noise may also warrant a review of the rateable value, especially if the property’s functionality or appeal is temporarily diminished.
In all these cases, it is the responsibility of the ratepayer to report the changes to the VOA. Prompt reporting ensures that valuations remain accurate and that businesses do not pay more than necessary.
What Should You Do If You Think Your Rateable Value Is Wrong?
If you believe the VOA has assigned an incorrect rateable value to your property, you have the right to request a review through the Check, Challenge, Appeal (CCA) system.
The process begins with a Check, where you review the information held by the VOA, such as the property’s size, layout, and usage. If you find any inaccuracies, you can submit corrections. If the VOA agrees with the changes, your valuation may be adjusted without further action.
If your Check does not result in a revised rateable value, you can then submit a Challenge, providing detailed evidence to support your case. This might include comparable rent information, photographs, floor plans, or details about structural issues or limitations.
Finally, if you remain dissatisfied with the outcome, you can take the case to the Valuation Tribunal for England, an independent body that will make a binding decision.
It’s important to note that the result of a challenge can go either way. In some cases, the rateable value might be increased if the VOA finds it was initially set too low.
What Happens in Real Life When a Business Challenges Their Rates?
Consider a real case involving an independent hair salon in Sheffield. After the 2023 revaluation, the rateable value of the property increased from £16,000 to £23,500. This rise led to a substantial increase in the business rates bill at a time when the salon was already struggling with rising costs.
The owner reviewed the VOA’s records and discovered that the floor space listed was outdated, including a now-unusable basement that had been damaged and closed for over a year. She submitted a Check request, including photographs and a layout plan. After receiving no adjustment, she proceeded to Challenge the valuation.
The VOA reviewed the evidence, agreed the space was no longer usable, and revised the rateable value to £19,000. The resulting bill was reduced by over £2,300 per year. This example shows how the system can be responsive when businesses actively engage and provide clear information.
What Types of Relief Are Available to Reduce Business Rates?
While business rates can be substantial, several reliefs exist to reduce the burden for eligible businesses. These are generally administered by local councils and can be applied for directly.
- Small Business Rate Relief (SBRR) offers full relief to properties with a rateable value of £12,000 or less, and tapered relief for values up to £15,000.
- Charitable Relief allows up to 80% reduction for properties used by registered charities for charitable purposes.
- Rural Rate Relief supports businesses operating in small rural communities.
- Empty Property Relief may be available for properties that are vacant for a temporary period.
These reliefs are crucial in supporting small and medium-sized enterprises and can make a considerable difference to a business’s financial stability.
What Are the Current Business Rates Trends in England and Wales?
The scale of the business rates system is vast, with billions collected annually. Here’s a snapshot of the current state based on official figures:
Business Rates Statistics (2023–24)
| Statistic | Figure |
|---|---|
| Total rateable properties | Approx. 2.1 million |
| Total annual rateable value (England) | £68 billion |
| Average rateable value | £32,380 |
| Estimated business rates collected | £26 billion |
| Properties under £15,000 rateable value | Over 700,000 |
| Properties receiving Small Business Relief | Approx. 600,000 |
These figures reflect the significant role that business rates play in local government funding while also highlighting how many businesses operate at the lower end of the rateable value scale.
Should You Consider Appointing a Rating Agent?
While many businesses manage their rates themselves, some choose to appoint a rating agent or chartered surveyor. These professionals can assist in checking valuations, submitting challenges, or even securing reliefs.
However, business owners must be cautious when choosing representation. Not all agents operate ethically, and some may make false promises or submit misleading information to secure reductions. This could result in investigations, penalties, or increased liabilities.
To avoid problems, choose agents affiliated with professional bodies such as the Royal Institution of Chartered Surveyors (RICS) or the Institute of Revenues Rating and Valuation (IRRV). The VOA also publishes guidance on how to select a reputable agent and avoid scams.
What Should Businesses Expect From the 2026 Revaluation?
The upcoming 2026 revaluation will use data from 1 April 2024, meaning it reflects today’s rental conditions, not those from several years ago. This makes it particularly relevant as commercial property markets continue to recover and adjust after the pandemic.
Draft values will be published by 31 December 2025, and businesses will have access through their online valuation accounts. The revaluation is expected to bring:
- Adjustments in sectors like logistics, where demand has surged
- Ongoing relief for retail and hospitality, where recovery remains fragile
- Changes for urban properties influenced by shifts in working patterns and occupancy
Businesses should prepare by ensuring their property records are accurate and gathering evidence if a challenge is anticipated.
Frequently Asked Questions
What is the Valuation Office Agency (VOA)?
It’s a government body under HMRC that sets the rateable value for business properties in England and Wales.
What is a rateable value?
It’s an estimate of the annual rent a property could earn on the open market at a specific date.
How often are business rates revalued?
Every three years, with the next revaluation taking effect in April 2026.
Who collects business rates?
Local councils collect business rates based on the rateable values set by the VOA.
Can I challenge my property’s valuation?
Yes. You can use the VOA’s Check, Challenge, Appeal process through your online account.
Do property changes affect rateable value?
Yes. Extensions, renovations, or usage changes can alter a property’s valuation.
What reliefs are available?
Common reliefs include Small Business Rate Relief, Charitable Relief, and Empty Property Relief.
Is the rateable value the same as rent?
No. It’s an estimated market rent, not necessarily what you actually pay.
How can I find my rateable value?
Visit the “Find a Business Rates Valuation” service on GOV.UK.
Should I hire a rating agent?
You can, but only use qualified agents registered with RICS or IRRV to avoid scams.
