Consultation outcome

Business rates revaluation 2023: the central rating list

Updated 6 May 2022

Applies to England

Scope of the consultation

Topic of this consultation:

This consultation seeks views on changes to the central rating list for the 2023 business rates revaluation. It covers the following areas:

• the current principles of the central rating list
• hereditaments suitable for moving to the central rating list for the 2023 revaluation
• interaction with the Business Rates Retention Scheme
• next steps

Scope of this consultation:

The scope of this consultation is limited to the contents of the central rating list for the 2023 rating list. The consultation does not extend to the assessment of the rateable value of hereditaments (which is done by the Valuation Office Agency independently of Ministers) or any matters falling within the ongoing Treasury Fundamental Review of Business Rates (such as the rateability of plant and machinery and reliefs).

Geographical scope:

These proposals relate to England only.

Impact assessment:

No impact assessment has been prepared for this consultation as it concerns a local taxation regime and amendments to any tax are excluded from the definition of a regulatory provision^{[footnote 1]}.

Basic Information

Body/bodies responsible for the consultation:

Ministry of Housing, Communities and Local Government.

Duration:

This consultation will last for 12 weeks from Monday 16 August 2021.

Enquiries:

For any enquiries about the consultation please contact: nick.cooper@communities.gov.uk

How to respond:

You can email your response to the questions in this consultation to ndr@communities.gov.uk

If you are responding in writing, please make it clear which questions you are responding to.

Written responses should be sent to:

Non-Domestic Rates Team LGF – Local Taxation
SE Quarter - 2nd Floor Fry Building
2 Marsham Street
London
SW1P 4DF

When you reply it would be very useful if you confirm whether you are replying as an individual or submitting an official response on behalf of an organisation and include:

- your name,

- your position (if applicable)

- the name of organisation (if applicable)

- an address (including post-code)

- an email address

- a contact telephone number

1. The current principles of the central rating list

1. Units of property liable for business rates – called hereditaments – are normally assessed on rating lists held by billing authorities^{[footnote 2]}. The hereditaments appear on the list in the area in which they are located. Hereditaments which cross more than one billing authority area appear in the list which it appears to the Valuation Officer contains the largest part by value.

2. In addition to local rating lists, the Secretary of State also holds a central list which contains hereditaments which, by their nature are unsuitable for including in local lists (e.g. utility networks). The central rating list can be viewed on the Valuation Office Agency’s website. Hereditaments appearing on the central rating list do not appear on local rating lists. The business rates bill for central list hereditaments is paid to the Secretary of State and then passed to the Treasury.

3. In December 2018, as part of its consultation document on business rates retention reform, the government set out the criteria used by the Secretary of State to inform decisions on whether a hereditament should appear on the central rating list^{[footnote 3]}. The criteria are reproduced at Annex A. The government continues to consider these criteria to be the relevant considerations for deciding whether hereditaments appear on the central rating list.

2. Hereditaments suitable for moving to the central rating list for the 2023 revaluation

4. The consultation in December 2018 invited views on whether there were hereditaments currently shown on the local rating list which should, in line with the criteria, appear on the central rating list. Having regard to the responses to that consultation the government is considering moving the following hereditaments to the central rating list for the start of the next rating list on 1 April 2023.

Telecom networks

5. There are more than of 300 telecom networks currently assessed on local rating lists with a total rateable value of about £300 million. Most of the rateable value in this sector is occupied by companies providing telecom services on large networks likely to span a great many billing authority areas. The government is, therefore, minded to move those telecom networks operated by such telecom companies to the central rating list for the 2023 revaluation. The government will make final decisions in consultation with individual ratepayers on a case by case basis having regard to all relevant considerations but in doing so will have regard to whether the person is included in the Register of persons with powers under the Electronic Communication Code. We estimate there to be between 30 and 50 telecom companies operating networks of this nature covering the vast majority of rateable value in this sector.

6. The remaining fibre networks in local lists are typically small private fibre lines providing a dedicated service to a business or other undertaking (such as a bank or university) known as private circuit leased lines. Moving small networks of this nature to the central list is likely to be disproportionate to the overall purpose of the central list and, therefore, the government is minded to leave on local rating lists small networks such as private circuit leased lines.

Railways

7. Network Rail and a few other regional railways (such as London Underground) are already assessed to the central rating list. Other local railway and tram systems are assessed on local rating lists. Most railways and tram systems currently assessed on local rating lists are either concentrated primarily in one billing authority area or cross only a small number of areas. Therefore, the government is minded to leave most non-national railways on local rating lists. An exception to this is the Channel Tunnel Rail Link (HS1) which crosses several billing authority areas and, therefore, is likely to merit moving to the central rating list. The government will make final decisions in consultation with individual ratepayers on a case by case basis.

The mobile telecom sector

8. Currently mobile telecom operators pay business rates in the following ways:

a. Some mobile telecom operators are on the central rating list and receive one rates bill for their telecommunication network. They therefore pay one bill for their fibre network, operational buildings, masts and other operational sites, whereas;

b. Other mobile telecom operators appear on local rating lists. They pay individual rates bills for:

i. their contiguous fibre networks together with buildings, masts and other sites connected to that fibre. Such networks are assessed on a single local rating list (the list which appears to contain the largest part of the network by value), whereas;

ii. their non-contiguous sites – primarily mast or similar sites which are connected via another operator’s fibre network or by wireless means – which are assessed individually in the local rating list where they are located.

9. However, with the roll out of 5G this existing approach is unlikely to be fit for purpose. 5G will mean the deployment of potentially very large numbers of “small cells” – perhaps up to a million. We do not expect these small cells to fall within any of the existing central list assessments. If these small cells are not connected and occupied with a network (e.g. if they are connected wirelessly or via a 3rd party network) then, without changing the way telecoms are captured for business rates, 5G roll out will lead to large numbers of new small value hereditaments on local rating lists. Such an outcome is not sustainable for the business rates system and would create considerable administrative burden for the Valuation Office Agency, billing authorities and the 5G operators.

10. In light of this the government is reviewing how hereditaments in the mobile telecoms sector should be assessed to accommodate 5G. We have considered whether 5G sites can be separately assessed for business rates from the rest of the telecom sector (for example by creating a single hereditament for all small cells operated by a company within one billing authority area) but consider this is neither practical nor desirable because:

a. we do not think it would be possible to isolate for business rates 5G equipment, infrastructure and networks from the existing telecom system, and

b. 5G is expected to form part of integrated telecom businesses making valuation of 5G in isolation challenging.

11. Therefore, the government is minded to prescribe a single hereditament for each mobile telecom operator covering their operational rateable equipment such as their masts, poles, towers, fibres and their sites and move them to the central rating list. Mobile telecom operators will then pay one business rates bill for England for all of their operational rateable land and equipment.

12. Were it to proceed, the government would need to identify those companies operating mobile telecom networks which should, as a result, be designated in the central rating list. It would also need to consider what, if any, changes would be needed to the regulations governing the central list ^{[footnote 4]}. This may need to include Wireless Infrastructure Providers if they are likely to be in rateable occupation of masts or similar sites. The government will work with the telecom sector and individual companies to resolve these matters.

13. Moving the mobile telecom sector to the central list will not mean that any plant and machinery which is currently non-rateable would become rateable (or the reverse). The rules of when plant and machinery is rateable are being considered as part of the Treasury’s Fundamental Review of Business Rates but apply equally to both the central rating list and local rating lists.

The Non-Domestic Rating (Telecommunications Apparatus) (England) Regulations 2000 (SI 2000 No. 2421) “the mast sharing regulations”

14. In 2000 the government regulated to provide that telecom masts (and other similar facilities such as roof-top sites) which host the equipment of several mobile telecom operators (and might otherwise have required several small rating assessments for each operator sharing the site) should be treated as one assessment with the business rates paid by the site host (typically the main operator at the site). The mast sharing regulations apply as follows:

a. where an operator appears on the central rating list then any rateable land and equipment which they occupy at the site is included in their central list assessment (and if they are the host at the site this will include any site sharers), whereas

b. where an operator appears on the local rating list then any rateable land and equipment which they occupy at sites is included in the rating assessment of the mast host. If they are the mast host then they pay the rates for the whole mast.

15. The mast sharing regulations were made to improve the administration of the business rates system and also remove a potential barrier to encouraging mobile providers to share masts. However, most masts or similar sites are likely to be operated by companies which, if the government decides to proceed with these proposals, would be moved to the central rating list. Accordingly, we would expect most masts or similar sites and most mast sharers currently assessed on local rating lists (typically under the VOA Special Category Code 66) to be deleted from 1 April 2023 and be included in new central list assessments. Therefore, the mast sharing regulations would from 1 April 2023 have no application on the local rating list for most masts.

16. Furthermore, if left in place the mast sharing regulations could create uncertainty over the valuation of the new central list assessments as they would require the Valuation Officer to include in the single central list valuation of one person (the site host) part of the business of another person (the site sharer). Therefore, the government is minded to revoke the mast sharing regulations with effect from 1 April 2023.

17. There may still be some companies operating masts which will continue to appear on the local rating list. However, the Electronic Communication Code now provides that mast sharing is an established right and, as such, we do not expect revoking the mast sharing regulations to create any new barrier to future mast sharing.

3. Interaction with the Business Rates Retention Scheme

18. The government intends to ensure that, as far as is practicable, retained business rates incomes are unaffected by the revaluation in 2023. To meet this commitment at the 2017 revaluation we made a series of changes to the tariffs and top-ups, the details of which were explained at section 3.4 and Annex A to the 2017 Settlement technical consultation.

19. In line with this commitment, the government will also ensure that, as far as is practicable, retained business rates incomes are unaffected by any changes it makes in regulation moving ratepayers from local lists to the central rating list at the 2023 revaluation. The Government will work with local government on the details of this adjustment and consult upon it ahead of the 2023/24 settlement.

4. Next steps

20. The government will make final decisions, in light of the responses to this consultation and discussions with the ratepayers concerned, in the autumn and then soon after make any necessary changes to the regulations to have effect from 1 April 2023. This will allow for the Valuation Office Agency and the sector to prepare draft 2023 rating lists on the basis of the amended regulations.

The government would welcome views on its proposed changes to the central rating list for the 2023 revaluation.

Annex A: Central list criteria

Introduction

1. The starting principle for the updating of the central non-domestic rating list is that, as much as is practical, authorities and rate payers will see no loss and no gain as a result of movement between lists.

2. Under the Local Government Finance Act 1988 the Secretary of State has the power to designate hereditaments to the central non-domestic rating list. Ministerial decisions are likely to be informed by the following criteria, which currently form the primary basis of consideration:

a. The nature and use of the property;

b. The size and geographical spread of the property; and

c. The suitability or otherwise for assessment of the property on local non-domestic rating lists.

3. These criteria will remain the primary basis on which suitability for listing in the central list is assessed, in the majority of cases. Typically, properties meeting these criteria are likely to be used for infrastructure or utilities; be considered to be networks; and/or be administratively difficult to assess as single entities. The criteria will be used in combination to inform the overall suitability of hereditaments for listing in the central list.

Criterion a - The nature and use of the hereditament

4. The central list is used for networks. Although there is no specific definition of a network, they are typically: cables for electricity and communication; pipelines for water, gas and other materials; railways; and certain items associated with those networks (electricity and gas meters).

5. Generally, the occupiers of network hereditaments are statutory undertakers but that is not always the case. Statutory undertakers are companies or other bodies with legal powers to undertake works such as install electricity cables or dig up the road in order for them to fulfil their statutory function (usually the provision of a utility such as water and gas). Occupiers may be considered similar to statutory undertakers in other circumstances, such as where they are involved with the provision of a utility and they have to comply with certain regulatory conditions set by a regulator.

Criterion b - The size and geographical spread of the property

6. Networks can vary in size and not all merit assessment on the central list. In some cases, it will be clear that they belong on local lists – perhaps because they are contained entirely within a single local list boundary or because they have a small rateable value. For larger networks the Secretary of State must decide at what point they more appropriately belong in the central list. In doing this, it will not normally be appropriate to develop standard rules (such as length or number of local authorities crossed) as that may lead to arbitrary outcomes, but rather to look at the overall size and spread of the property and how it fits within the local lists system. However, some assessments with small rateable values may still span several rating list areas. Therefore, the Secretary of State may consider only moving assessments whose rateable value is more than a particular level, so as to ensure the use and number of ratepayers on central rating list remains proportionate.

7. Although the number of lists over which the property crosses would form part of this consideration, in many cases it will not be possible to determine precisely how many rating lists are crossed by a network due to the administrative practices of the occupier.

Criterion c - The suitability or otherwise for assessment of the property on local non-domestic rating lists

8. As business rates is a local tax, if a hereditament can reasonably be assessed on the local list then it should stay on the local list.

9. The rules for properties which cross rating list boundaries provide for them to appear in the list which the valuation officer believes contains the largest part of the rateable value. In most cases this will provide a reasonable outcome. A property is very unlikely to span more than one boundary and, therefore, in that normal case, at least half of the rateable value of the property will be within the area of the local authority which contains the full rating assessment.

10. However, where hereditaments cover large areas and many local authorities, the largest part of the rateable value falling within an area may still only be a small proportion of the total rateable value of the property. As a result, the rateable value which is attributable to a local list area in which the property is assessed may be small in comparison to the total rateable value of the rating assessment. This means that it may be difficult to identify a single local rating list on which assessment of a network would be a reasonable outcome.

11. Furthermore, networks most appropriately listed in the central list may be contiguous units of property, for example in a telecommunication network where data is transmitted throughout the network as part of a single operation. An attempt to accurately capture the rateable value of the networks for each local rating list would therefore create artificial assessments unrelated to the actual business.

About this consultation

This consultation document and consultation process have been planned to adhere to the Consultation Principles issued by the Cabinet Office.

Representative groups are asked to give a summary of the people and organisations they represent, and where relevant who else they have consulted in reaching their conclusions when they respond.

Information provided in response to this consultation may be published or disclosed in accordance with the access to information regimes (these are primarily the Freedom of Information Act 2000 (FOIA), the Environmental Information Regulations 2004 and UK data protection legislation. In certain circumstances this may therefore include personal data when required by law.

If you want the information that you provide to be treated as confidential, please be aware that, as a public authority, the Department is bound by the information access regimes and may therefore be obliged to disclose all or some of the information you provide. In view of this it would be helpful if you could explain to us why you regard the information you have provided as confidential. If we receive a request for disclosure of the information we will take full account of your explanation, but we cannot give an assurance that confidentiality can be maintained in all circumstances. An automatic confidentiality disclaimer generated by your IT system will not, of itself, be regarded as binding on the Department.

The Ministry of Housing, Communities and Local Government will at all times process your personal data in accordance with UK data protection legislation and in the majority of circumstances this will mean that your personal data will not be disclosed to third parties. A full privacy notice is included below.

Individual responses will not be acknowledged unless specifically requested.

Your opinions are valuable to us. Thank you for taking the time to read this document and respond.

Are you satisfied that this consultation has followed the Consultation Principles? If not or you have any other observations about how we can improve the process please contact us via the complaints procedure.

Personal data

The following is to explain your rights and give you the information you are be entitled to under UK data protection legislation.

Note that this section only refers to personal data (your name, contact details and any other information that relates to you or another identified or identifiable individual personally) not the content otherwise of your response to the consultation.

1. The identity of the data controller and contact details of our Data Protection Officer

The Ministry of Housing, Communities and Local Government (MHCLG) is the data controller. The Data Protection Officer can be contacted at dataprotection@communities.gov.uk or by writing to the following address:

Data Protection Officer
Ministry of Housing, Communities and Local Government
Fry Building
2 Marsham Street
London
SW1P 4DF

2. Why we are collecting your personal data

Your personal data is being collected as an essential part of the consultation process, so that we can contact you regarding your response and for statistical purposes. We may also use it to contact you about related matters.

3. Our legal basis for processing your personal data

The collection of your personal data is lawful under article 6(1)(e) of the UK General Data Protection Regulation as it is necessary for the performance by MHCLG of a task in the public interest/in the exercise of official authority vested in the data controller. Section 8(d) of the Data Protection Act 2018 states that this will include processing of personal data that is necessary for the exercise of a function of the Crown, a Minister of the Crown or a government department i.e. in this case a consultation.

4. With whom we will be sharing your personal data

Some or all of the data received may be shared by MHCLG with the Valuation Office Agency, DCMS, HMT and DfT.

MHCLG may appoint a ‘data processor’, acting on behalf of the department and under our instruction, to help analyse the responses to this consultation. Where we do we will ensure that the processing of your personal data remains in strict accordance with the requirements of the data protection legislation.

5. For how long we will keep your personal data, or criteria used to determine the retention period

Your personal data will be held for two years from the closure of the consultation

6. Your rights, e.g. access, rectification, restriction, objection

The data we are collecting is your personal data, and you have considerable say over what happens to it. You have the right:

a. to see what data we have about you

b. to ask us to stop using your data, but keep it on record

c. to ask to have your data corrected if it is incorrect or incomplete

d. to object to our use of your personal data in certain circumstances

e. to lodge a complaint with the independent Information Commissioner (ICO) if you think we are not handling your data fairly or in accordance with the law. You can contact the ICO online, or telephone 030 3123 1113.

Please contact us at the following address if you wish to exercise the rights listed above, except the right to lodge a complaint with the ICO: dataprotection@communities.gov.uk or

Knowledge and Information Access Team
Ministry of Housing, Communities and Local Government
Fry Building
2 Marsham Street
London
SW1P 4DF

7. Your personal data will not be sent overseas

8. Your personal data will not be used for any automated decision making

9. Your personal data will be stored in a secure government IT system

1. Section 22(4)(a) of the Small Business, Enterprise, and Employment Act 2015. ↩

2. A billing authority is, in two tier areas, the London borough or the district council, and in single tier areas the unitary authority or metropolitan authority. ↩

3. Section 3.2 and Annex A. ↩

4. Central Rating List (England) Regulations 2005 SI 2005 No. 551 as amended. We anticipate using the description in regulation 8(2). ↩