Rating & the licensed trade

23rd September 2016

Licensed premises have traditionally been valued on a turnover basis, with percentages applied to the various elements of turnover generated within the property. There have been many variations of the valuation schemes for the different types of licensed proprieties e.g hotels, public houses.

Details of the final valuation schemes for the 2017 Rating Revaluation for Scotland have yet to be released as at the date of publication of this article. Initial indications from discussions with the Scottish Assessors Association (SAA) are that licensed property valuation schemes will still be turnover-based, although, there are likely to be variations from the previous schemes. The valuation scheme for England has been issued by the Valuation Office (VO).

Many licensed premises will have been affected by the economic recession from 2008 onwards and will show a fall in turnover since then. In assessing the values for the 2017 Revaluation, the SAA/VO will look at turnover figures received for the years from April 2008 to April 2015 and apply the percentages detailed in the new valuation scheme relative to that turnover to arrive at the rateable value (RV).

Looking at public houses as an example, if the RV was currently £40,000 and the turnover fell by 25% then, on the basis of the existing 2010 scheme, the RV should fall by around the same percentage, depending on the trade mix, which would result in an RV of around £30,000. Applying the UBR (the rates poundage applied to the RV to arrive at your rates payable) at the current 2016/2017 rate of 51.0 pence in the pound for properties with an RV in excess of £35,000, the rates payable would reduce by £5,100 per annum.

Indications, however, are that the SAA may remove some allowances for food trade and machine income, for example, and may limit the range of percentages on turnover for pub valuations. This will result in some pubs not receiving the same benefit they would have had under the 2010 valuation scheme. We believe the Assessors’ revisals should be challenged in order that the ratepayer benefits from a value change reflecting the full fall in turnover.

Rates are one of the biggest single costs to any licensed property operation and it is therefore very important that the RV should be appraised by an experienced surveyor to ensure that the ratepayer is not paying more than necessary. Even if the RV does not increase or even decreases, it should still be looked at to ensure that it is correct to avoid paying more rates than necessary.

For specialist advice on licensed premises business rates contact:

Andrew Macpherson, Consultant ( / 07785 951 090
Douglas Lambie, Associate ( / 07909 092 642


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