Rates in the United Kingdom
Rates are a tax on property in the United Kingdom used to fund local government. Business rates are collected throughout the United Kingdom. Domestic rates are collected in Northern Ireland and were collected in England and Wales before 1990 and in Scotland before 1989.
Rates had their origin in the Poor Law Act 1601, for parishes to levy a poor rate to fund the Poor Law, although parishes often adopted property rates to fund earlier poor law measures. Indeed, the Court of Appeal in 2001 called the rating an "ancient system", suggesting that it had medieval origins.
As local government developed, separate rates were collected by parish authorities, borough corporations and county authorities. The County Rates Act 1739 ended the practice of separate rates being levied for individual purposes, such a highway rate and provided for a unified county rate.
Rates on residential property were based on the nominal rental value, reassessed periodically in revaluations. By the Rating and Valuation Act 1925, revaluations were supposed to take place every five years but in practice they were frequently delayed or suspended. Revaluations took place in 1928/1929, 1934, 1956 (but based on 1939 values), 1963, and 1973. A revaluation due in the early 1980s was scrapped by the Secretary of State for the Environment Michael Heseltine in June 1979, with Heseltine urging householders to tear up the forms already sent out by the Valuation Office.
Rates were abolished in England and Wales in 1990 and replaced with the Community Charge (so called "poll tax"), a fixed tax per head that was the same for everyone. This was soon replaced with the Council Tax, a system based on the estimated market value of property assessed in bands of value, with a discount for people living alone.
The Crown Estate Paving Commission still levies rates on residential property within its jurisdiction, in the area around Regent's Park, London, under the provisions of the Crown Estate Paving Act 1851.
Domestic rates are the current local government taxation in Northern Ireland. Domestic rates consist of two components, the Regional rate set by the Northern Ireland Assembly and the District rate set by 26 district councils. Rate levels are set annually. The domestic rates are based on the capital value of the residential property on 1 January 2005. Valuation and rating of property is handled by Land and Property Services. Domestic rates are now unique to Northern Ireland within the United Kingdom.
Rates on non-residential property (business rates) are still charged, at a uniform rate set by central government. Rates are collected by local councils, but the moneys collected are distributed nationally according to population.
Rating assessments (rateable values) are made on all non-domestic properties. As well as business, this includes village halls and other non-business occupations. The exception to this is where a hereditament is exempt by virtue of Schedule 6 of the Local Government Finance Act 1988 which specifies exempt classes.
The rateable value should represent the reasonable rental value of the occupation according to the circumstances at the "Material Day" and according to rental values at the "Antecedent Valuation Date". (For the compiled 2005 Rating List the "Material Day" is 1 April 2005 and the "Antecedent Valuation Date" is 1 April 2003).
Later physical changes will have a later Material Day but the Antecedent Valuation Date will still be 1 April 2003 for the currency of the 2005 Rating List. The Rating List is a public document.
Taxes raised for other purposes are also called rates in the United Kingdom. A specific example is the drainage rate charged to fund drainage work which protects low-lying areas from flooding. The first Act of Parliament to authorise the collection of drainage rates was the Statute of Sewers, passed by King Henry VIII in 1531, which established a principle of no benefit, no rates. This hampered the work of drainage authorities for four centuries, since the number of people who received direct benefit from such works was too few to be able to properly fund the work. The concept was finally overturned by the Land Drainage Act 1930, which repealed 20 Acts from Henry's Act of 1531 to the Land Drainage Act of 1929, and created Catchment Boards, who were responsible for complete river systems, and could charge drainage rates to people living throughout the catchment. Whereas agricultural land is normally excluded from rating, drainage rates are collected from all occupiers of agricultural land and buildings within a drainage district. This principle was enshrined in the Land Drainage Act 1991.
- Alan Day, "Heseltine's hassle over the Rates", The Observer, 1 July 1979, p. 10.
- "BUSINESS RATES AND THE EFFECT ON THE PROPERTY MARKET". 2017-03-01. Retrieved 2017-04-19.
- Dobson & Hull 1931, pp. ix-xiii
- "Drainage Rate". Lindsey Marsh Drainage Board. Retrieved 24 November 2012.