100 per cent retention of business rates: issues for consideration Contents

Glossary

Business rates baseline

The amount of a local authority’s share (local share) of estimated business rates revenue at the outset of the Business Rates Retention Scheme.

Baseline funding level

Authorities’ share of the local share of business rates determined by an assessment of their needs undertaken in 2012–13.

Central share

The share of locally collected business rates, currently set at 50 per cent, paid to central government by authorities which collect business rates. The central share is re-distributed to local government through grants, including Revenue Support Grant.

Levy

Authorities which experience disproportionate growth in business rates income pay a levy. These payments are used to fund the safety net.

Local share

The share of locally collected business rates, currently set at 50 per cent, retained by local government.

Multiplier

The multiplier when multiplied by the rateable value of a property determines a ratepayer’s business rate bill. The multiplier is set nationally and, currently, is uprated annually by the Retail Prices Index (RPI).

Rates reliefs

The rating system currently provides mandatory relief to charities and other categories of ratepayer and permits authorities to grant discretionary relief to other rate payers.

At a reset, baseline funding levels, business rates baselines, tariffs and top-ups are set for each authority to take account of changes in relative need and resource. A reset was due to take place in 2020.

Reset period

The period of time between resets during which local authorities can retain (after taking into account the levy and payments owing to relevant shares) the growth in business rates revenue. Under the current system, the initial reset period was to be between 2013 and 2020.

Revaluation

Business properties are normally re-valued every five years to reflect relative changes in rental valuations. The revaluation due to take place in 2015 was postponed until 2017.

Revenue Support Grant

The main grant for local authorities from central government under the current system.

Safety net

The method of protecting an authority which sees its annual business rates income drop by more than 7.5 per cent below its baseline funding level. Such authorities receive a safety net payment at the end of the financial year from central government.

Tariffs and top ups

These are calculated by comparing an authority’s business rates baseline against its baseline funding level. They are fixed at the outset of the scheme and index linked to RPI. Authorities with a higher business rates baseline than its baseline funding level pay a tariff to central government. Authorities with a lower business rates baseline than their baseline funding level receive a top up from central government.





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9 June 2016