How your property is valued for business rates
Source: gov.uk (2025-11-26)

Find out how the Valuation Office Agency (VOA) calculates rateable values for business rates.

The Valuation Office Agency (VOA) calculates a rateable value for each business property in England and Wales. A rateable value is an estimate of what it would cost to rent a property for a year, on a set date known as the Antecedent Valuation Date (AVD). It is assumed that the:
- property is vacant
- property is in reasonable repair
- property is available to let on the open market
- tenant pays for the business rates, repairs and insurance
- rent has been agreed between a reasonable landlord and a reasonable tenant
- rent began on the AVD
You can view your property’s ratable value in your business rates valuation account (https://www.gov.uk/business-rates-valuation-account) or using the find a business rates valuation (https://www.gov.uk/find-business-rates) tool. You can also see how your rateable value has been calculated and compare it to similar properties. Your local council uses the rateable value to work out your business rates bill. Your rateable value is not what you pay in rent or business rates.

Ways of calculating rateable values

There are 3 main ways of working out rateable values. The method the VOA uses depends on the type of property and the information available about the property.

The rental method

The VOA uses the rental comparison method where there’s a lot of information available about lease terms and rents paid. We use it for properties that are often rented on the open market, such as:
- shops
- offices
- cafes
- factories and warehouses
We look at how much the property was rented for around the AVD, also considering:
- whether the rent paid is below market value
- the terms of the lease or licence
- the relationship between the landlord and tenant
- any incentives to rent the property
- if the tenants have made improvements to the property
- whether the rent includes services and utilities
- when the rent was agreed, as values change over time
- what similar, nearby properties are being rented for
We use this information to calculate what an appropriate annual rent would be for the property. This is the property’s rateable value.

The receipts and expenditure method

The receipts and expenditure method is also known as the profits method. The VOA often uses it to value properties like cinemas and theme parks. We usually use it when the property’s main purpose is to make a profit and there is not much information about rents paid. To calculate rateable values using the receipts and expenditure method, we generally:
- Take a representative sample of each type of property.
- Consider the fair maintainable trade of a reasonably efficient operator, ideally by reviewing 3 years of accounts to arrive at gross income.
- Deduct the cost of sales and working expense.
- Deduct what would be a fair income for the operator.
The remaining amount is what could reasonably be paid to rent the property, This is the figure we use for the property’s rateable value.

To apply the rateable values of the representative samples to similar properties, we calculate what percentage of the properties’ total income would be spent on rent. This allows us to calculate rateable values of other properties without needing the full financial information. We use a wide range of sample properties to make sure we have an accurate representation of all property types in all locations.

The contractor’s basis

The VOA often uses the contractor’s basis to value properties like schools, hospitals and airports. We use it for properties that are not normally rented out and often are not run for profit. The rateable value is based how much it would cost to build the property. To calculate rateable values using the contractor’s basis, we:
- Estimate how much it would cost to build a modern equivalent of the property today on a cleared site.
- Adjust this figure based on the property’s actual age and condition.
- Add the value of any land attached to the property and any site improvements.
- Multiply the total cost by a percentage known as the ‘decapitalisation rate’ — decapitalisation rates are set in legislation at each revaluation.
Example

The VOA is valuing a school. The total estimated cost of the property and land is £1 million, and the legal decapitalisation rate is 2.6%. We multiply £1 million by 2.6%, which gives a rateable value of £26,000.

Valuation schemes

The VOA puts all non-domestic properties into valuation schemes, so we can value similar properties in groups. We group properties valued using the rental method into local valuation schemes. We usually group properties valued using the receipts and expenditure method or contractor’s basis into national valuation schemes. You can find the details of your property’s valuation scheme in your business rates valuation account (https://www.gov.uk/business-rates-valuation-account).

Measuring properties

The VOA usually measures the area of a building using either the net internal area method (NIA) or gross internal area method (GIA).

They’re based on the Royal Institution of Chartered Surveyors (RICS) code of measuring practices. Read the latest RICS Code of measuring practice on the RICS website (https://www.rics.org/uk/upholding-professional-standards/sector-standards/real-estate/code-of-measuring-practice/).

Watch a video on how the VOA measures properties.

How we measure properties for business rates (https://www.youtube.com/watch?v=J1eeK9cuIEs)

NIA

NIA is the usable area within a building measured to the inside of the walls of each floor. We use it for properties like shops, offices and restaurants.

Things that contribute to the usable area include:
- entrance halls
- kitchens
- built-in cupboards in usable areas
- ramps and steps in usable areas
- areas occupied by ventilation and heating grilles
Things that do not contribute to the usable area include:
- shared entrance halls, landings and balconies
- internal structural walls
- toilets
- cleaners’ rooms
- columns and chimney breasts
- stairwells and lift shafts
GIA

GIA is the area within a building measured to the inside of the perimeter walls of each floor. We use it for properties like factories, workshops and warehouses.

Things that contribute to the area of a building include:
- entrance halls
- internal walls and partitions
- internal balconies and walkways that are open sided
- columns and chimney breasts
- stairwells and lift shafts
Things that do not contribute to the area of a building include:
- the thickness of the perimeter wall
- external projections
- external balconies and walkways that are open sided
- canopies
How different property types are valued

Find out how the VOA values:
- shops and other high street businesses (https://www.gov.uk/guidance/how-shops-and-high-street-businesses-are-valued-for-business-rates)
- factories, workshops and warehouses (https://www.gov.uk/guidance/how-factories-workshops-and-warehouses-are-valued-for-business-rates)
- offices (https://www.gov.uk/guidance/how-offices-are-valued-for-business-rates)
- pubs (https://www.gov.uk/guidance/how-pubs-are-valued-for-business-rates)
- hotels (https://www.gov.uk/guidance/how-hotels-are-valued-for-business-rates)
- restaurants (https://www.gov.uk/guidance/how-restaurants-are-valued-for-business-rates)
- day nurseries (https://www.gov.uk/guidance/how-day-nurseries-are-valued-for-business-rates)
- petrol stations and service stations (https://www.gov.uk/guidance/how-petrol-filling-stations-are-valued-for-business-rates)
- self-catering holiday lets (https://www.gov.uk/guidance/how-self-catering-holiday-lets-are-valued-for-business-rates)
Occupying multiple parts of a shared property

Properties in England

If you occupy more than one part of a property, the number of rateable values you get depends on whether:
- the parts you occupy touch each other
- you use the parts for the same purpose
The parts or floors you occupy touch when either:
- one part shares all or some of a wall (or type of enclosure) with the other part
- all or some of one floor is directly over the ceiling of the other floor
The VOA will give one rateable value for all the parts that touch and are used for similar purposes. You will get one business rates bill for these parts.

The parts or floors you occupy do not touch when they are separated by either:
- another occupier
- areas shared with other occupiers such as lifts, stairwells or hallways
The VOA will give a valuation for each part that does not touch. You will get more than one business rates bill.

If you have parking separated from the building by a shared area, the VOA will give separate valuations for the building and the parking.

Properties in Wales

Before 1 April 2023, if you occupied parts of a property in Wales that were side by side or one floor above another, you received a valuation for each building or floor.

If there was a connection between the buildings or floors that you did not share with anyone else, you received one valuation for the parts that were connected.

Wales adopted the same rules as England from 1 April 2023.