The Non-Domestic Rating (Chargeable Amounts) (Wales) Regulations 2022

EXPLANATORY NOTE

(This note is not part of the Regulations)

These Regulations come into force on 31 December 2022 and apply in relation to Wales.

These Regulations prescribe rules to be used to find the chargeable amount for cases which fall within the descriptions prescribed in the Regulations.

The prescribed rules apply to a chargeable day falling within the period of five years beginning on 1 April 2023 and ending on 31 March 2028 (“the relevant period”). A chargeable day is defined in regulation 2.

The prescribed rules apply to defined hereditaments. A defined hereditament is a hereditament shown in a local list or in a central list on 31 March 2023, the relevant day and every day between. Where a hereditament is removed from a local list or a central list, subject to any appeals, the prescribed rules do not apply to the hereditament from the day on which the removal took effect. Such a removal would not impact the application of the prescribed rules to the hereditament prior to the day on which the removal took effect.

The prescribed rules reduce the increase in a ratepayer’s liability as a result of the 2023 revaluation. Regulation 4 provides the calculations for the chargeable amount for the hereditament on 31 March 2023 (the base liability). This is the day before the new lists compiled on 1 April 2023 have effect. 0.535 is the non-domestic rating multiplier calculated for the financial year 2022-23 under paragraph 3B of Schedule 7 to the Act.

Regulation 6 provides the formula for finding the notional chargeable amount (“NCA”). This is the chargeable amount which would apply for the defined hereditament on 1 April 2023 if the prescribed rules did not apply. There are two formulae in regulation 6 to reflect the possibility that the prescribed rules apply to ratepayers in receipt of small business rate relief and ratepayers who do not receive such relief.

The formula to find the NCA uses the rateable value, non-domestic rating multiplier and, where necessary, E, as they are on 1 April 2023. E is the figure prescribed by the Welsh Ministers in the Non-Domestic Rating (Small Business Relief) (Wales) Order 2017 (S.I. 2017/1229) (W. 293) which applies to the hereditament in question on 1 April 2023. The fact that the relevant day for which the chargeable amount is being calculated may be later than 1 April 2023 does not change these figures. This is because the reduction in liability is based on a proportion of the increase in liability between 31 March 2023 and 1 April 2023 due to the compilation of the new lists.

Regulation 7 modifies regulation 6 in the event that a change to the rateable value for a hereditament takes effect during the relevant period but from a day after 1 April 2023. It operates so that the NCA, used for the purposes of regulations 8 and 9(a) and the formulae in regulations 14 and 15, is calculated using the new rateable value rather than the rateable value on 1 April 2023. The non-domestic rating multiplier and E will remain as they were on 1 April 2023.

Part 3 prescribes the descriptions of cases to which the prescribed rules apply. Regulations 9 and 10 both have to be read in conjunction with regulation 8. Regulation 9(a) provides that for the prescribed rules to apply, the base liability must have increased by more than £300. Regulation 9(b) requires the same person to have occupied the defined hereditament in order to be eligible for a reduction. Where occupation of the hereditament changes on 1 April 2023 or at any later date during the relevant period, the prescribed rules do not apply.

Regulation 10 describes cases where the prescribed rules do not apply. Regulation 10(a) addresses the possibility of an unoccupied hereditament falling within the cases in section 45A(2) or (3) of the Act (charities and registered community amateur sports clubs). In such a case, the ratepayer’s liability would be zero in accordance with section 45A(1) of the Act. Regulation 10(b) addresses the situation where a part of a hereditament is unoccupied and the billing authority has required the valuation officer to apportion the rateable value of the hereditament between the occupied and unoccupied parts of the hereditament under section 44A(1) of the Act. The prescribed rules do not apply to such a case. No reduction in chargeable amount is therefore available where such an apportionment applies to a defined hereditament and has effect in relation to the chargeable amount.

Where a defined hereditament is a case which falls within all of the descriptions prescribed in regulation 9 and does not fall within the descriptions in regulation 10, the rules prescribed in regulations 12 to 16 apply. These rules are to be used to find the chargeable amount for a chargeable day.

The first step under regulation 12 is to calculate the chargeable amount for the hereditament under section 43 of the Act for occupied hereditaments, section 45 of the Act for non-occupied hereditaments and section 54 of the Act for hereditaments shown in the central list. The second step is to reduce that amount by the amounts calculated under whichever of regulations 14 to 16 applies.

Regulations 14 and 15 provide a phased reduction in chargeable amounts during the period beginning on 1 April 2023 and ending on 31 March 2025. In the first year, the chargeable amount is reduced by an amount equal to 67% of the increase in liability between 31 March 2023 and 1 April 2023. In the second year the chargeable amount is reduced by 34% of the increase in liability between 31 March 2023 and 1 April 2023. The reduction in chargeable amount is calculated for each relevant day, with the figure 366 used in regulation 14 to reflect that 2024 is a leap year. Regulation 16 provides that during the period beginning on 1 April 2025 and ending on 31 March 2028 the chargeable amount is that found under section 43 of the Act for occupied hereditaments, section 45 of the Act for non-occupied hereditaments, and section 54 for hereditaments shown in the central list (i.e. there is no reduction for those financial years).

Regulation 13 ensures that the prescribed rules do not reduce the chargeable amount to below zero.

The Welsh Ministers’ Code of Practice on the carrying out of Regulatory Impact Assessments was considered in relation to these Regulations. As a result, a regulatory impact assessment has been prepared as to the likely costs and benefits of complying with these Regulations. A copy can be obtained from the Local Government Finance Policy Division, Welsh Government, Cathays Park, Cardiff, CF10 3NQ.