Rateable value (RV)- What is rateable value?
The rateable value is the estimated annual rental value of a commercial property which is calculated by a valuation officer. It’s used to determine how much a company pays for business rates in the UK.
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All non-domestic properties, including most businesses, are required to pay business rates. All of these businesses will have a rateable value based on an assessment of the building, which will determine the business rates they’ll pay.
Where to find your rateable value
Business rates are determined by multiplying the rateable value by the “multiplier” set by the government.
The rateable value, or property’s value, is based on the open market value from 2015. These are estimates from the Valuation Office Agency.
You can check the RV of your property on the UK Government Website or on your most recent business rates bill.
Rateable value vs. rent
The rateable value isn’t the same as the rent you pay for the property. The rateable value is an estimate of the amount the property could have been rented for in 2015. You’ll not be paying this amount in business rates, rather it is multiplied by a "multiplier" percentage in order to calculate the business rates.
Business rates work similarly to council tax for domestic properties.
The rent you actually pay for the property may be different from the rateable value. They may be similar amounts, but in the end, it’s what is agreed upon between you and your landlord.
Example of rateable value in business rates
Tim runs a small clothing shop in Manchester. From the UK Government website, he finds that the rateable value of his shop is £13,000. Since his RV is less than £51,000, he uses the “small business multiplier” of 49.1p (2020) outlined on the government website.
Business rates = (rateable value x multiplier) - business rates relief
Tim’s business rates are:
£13,000 (RV) x 0.491 (multiplier) = £6,383 (business rates)
Since his rateable value is under £15,000, he may also qualify for business rates relief which will reduce his bill.