Rating Manual section 3: maintaining the rating list

Part 6: Appendix 1 Improvement relief — examples scenarios

The Valuation Office's technical manual for the rating of business (non-domestic) property.

It is important to note that caseworkers will come across many different situations, and each must be addressed on the individual facts of the case by following the guidance provided in Rating Manual Section 3 Part 6. Whilst it is hoped the scenarios and examples provided are useful, they are not exhaustive, and it is important that caseworkers consider the circumstances of their case and arrive at a fully considered decision. If there remains any doubt as to the approach to be taken having read and applied the guidance, please consult with your Unit Technical Lead or Chief Valuer Group Technical Adviser.

When more than one set of qualifying works is completed within a 12 month period, a sequential certificate will be issued. This will include details of all sets of overlapping qualifying works within a 12 month period.

1. Example 1 — Industrial warehouse rateable value £25,000 — occupier adds an extension, a subsequent mezzanine and then demolishes the extension within a 12-month period

(a) Occupier builds an extension increasing the rounded rateable value (RV) to £30,000 effective 1 April 2025.

Valuation Office issues certificate at £5,000 for 1 April 2025 expiring 31 March 2026.

(b) Occupier builds a mezzanine floor within the warehouse effective 1st July 2025 increasing the RV to £32,698 which rounds to £32,500.

Valuation Office issues a revised certificate which includes these works and shows an RV £2,500 for 1 July 2025 expiring 30 June 2026. The revised certificate will still include details of the first set of qualifying works, RV £5000 from 1 April 2025 

(c) Occupier demolishes April 2025 extension from 1 October 2025 reducing the rounded RV to £27,500

Valuation Office issues an amended certificate end dating the first set of works, RV £5000, from 1 October 2025. This certificate still includes details of the second set of qualifying works, RV £2,500 from 1 July 2025.

2. Example 2 — Industrial warehouse RV £25,000 — occupier adds an extension, a subsequent mezzanine, demolishes part of the extension and adds rateable plant and machinery within a 12-month period.

(a) Occupier builds an extension increasing the rounded RV to £30,000 from 1 April 2025.

Valuation Office issues certificate at £5,000 for 1 April 2025 expiring 31 March 2026 (the first certificate).

(b) Occupier builds a mezzanine floor within the warehouse effective 1 July 2025 increasing the rounded RV to £32,500.

Valuation Office issues an amended certificate including the second set of qualifying works at £2,500 for 1 July 2025 expiring 30 June 2026

(c) Occupier demolishes part of the April 2025 extension from 1 October 2025 reducing the rounded RV to £30,000

Valuation Office issues an amended certificate which end dates the £5000 RV from 1 October 2025 and shows RV £2,500 from 1 October 2025 until 31 March 2026. This certificate will still include details of the second set of qualifying works although in light of the partial demolition the value should be reviewed and, if required, amended from 1 October 2025.

(d) Occupier adds additional rateable plant and machinery on 1 Dec 2025 increasing the rounded RV to £35,000

The Valuation Office issues an amended certificate to include this set of qualifying works showing an RV of £5,000 from 1 Dec 2025 expiring 30 November 2026.

3. Example 3 — Office Building RV £50,000 — occupier adds raised floors then reconfigures the floor plate removing some toilets increasing the office area.

(a) Raised floors added increasing the rounded RV to £55,000 from 1 June 2025

Valuation Office issues certificate at £5,000 from 1 June 2025 expiring 31 May 2026

(b) Reconfigures floorplate removing some staff toilets increasing office area increasing the rounded RV to £57,000 effective from 1 August 2025

Valuation Office issues an amended certificate adding the second set of qualifying works with an RV of £2,000 from 1 June 2025 expiring 31 May 2026. The value of the first set of qualifying works will be reviewed in the event the increased floor affects the rental rate and where necessary show a revised RV for the first set of work on the amended certificate.

4. Example 4 — Army Barracks RV £1,000,000 — occupier adds new training block replacing portacabins.

(a) New training block added to site replacing portacabins effective 1 September 2025. Training block adds £109,000 to RV, portacabins removed equate to £25,000 RV which resulted in an RV of £1,084,000 which rounds to £1,080,000.

Valuation Office issues certificate at £80,000 from 1 September expiring 31 August 2026 (The certificate reflects the improvement in RV — Here the increase from the new training block has been offset by the associated value-supressing activity in removing the portacabins).

5. Example 5 — Farm diversification — A farmer converts one of her agricultural barns to create a farm shop and café.

(a) Former agricultural barn converted to create a farm shop — a new hereditament in the list RV £15,000 from 1 March 2025

The change of use and works of conversion to the barn do not meet the definition of qualifying works since the works are bringing a new hereditament into the list. The barn having previously been exempt as an agricultural building occupied together with agricultural land used in connection with agricultural operations on that land. No certificate is applicable.

6. Example 6 — Office building RV £20,000 — Owner occupier adds a two-storey extension, subsequently lets the first floor of the rear extension to a tenant.

(a) Extension completed 1 September 2024 increasing RV to £25,000.

Valuation Office issues certificate at £5,000 effective 1 October 2024 expiring 31 August 2025.

(b) Owner lets first floor of the office extension effective 1 January 2025 creating two new hereditaments the newly let office RV £2,500 and the parent office RV £22,500.

The first floor let office is a new hereditament to the list — no certificate is applicable.

The original certificate needs to be revised at a reduced amount as from 1 January 2025 only the ground floor of the extension qualifies from 1 January 2025. The certified value will expire on 31 August 2025.

7. Example 7 — Petrol Filling Station (PFS) RV £75,000 — Occupier extends retail area, a subsequent Material Change of Circumstance (MCC) occurs with a new PFS developed nearby reducing the RV.

(a) Extension to retail area is qualifying works increases RV to £85,000 from 1 May 2024.

Valuation Office issues certificate at £10,000 from 1 May 2024 expiring 30 April 2025 based on extension to retail area.

(b) New PFS opens 1 September 2024, considered an MCC and RV reduced to £80,7500 (5%) from 1 September 2024 reflecting the MCC.

Certificate revised in line with adjustment for MCC reduction to £9,500 from 1 September 2024 expiring 30 April 2025.

8. Example 8 — Double shop unit (Units 1-2) RV £10,000 (Value in terms of zone A (ITZA) £1,000m2) occupied by ratepayer

(a) Ratepayer knocks down a structural wall between the retail and stock room areas increasing the retail area increasing RV to £12,000 from 1 May 2024

Valuation Office issues certificate at £2,000 effective 1 May 2024 expiring 30 April 2025.

(b) Shops subdivided 1 September 2024 into two single units. The value ITZA increases to £1,100m2 giving a revised RV of £6,600 for each unit. Unit 1 remains occupied by ratepayer.

Revised certificates are issued in respect of each shop reflecting both the improvement works and the amended ITZA value.

(c) Ratepayer vacate and Unit 1 undergoes a refit and is occupied by MSL solicitors from 1 January 2025 — refit has no effect on RV which remains £6,600

No action required from Valuation Office updated certificate unchanged. MSL as a new occupier will not meet the occupation condition and is for the billing authority to apply the occupation condition.

9. Example 9 — Mixed age industrial unit RV £50,000 subject to demolitions and a new extension

(a) The occupier demolishes a 1900s built free standing store at the rear of the site (RV £2,000) and a 1950s basic quality unlined side extension (RV £7,000) which is replaced by a similar sized new high quality extension (RV £10,000). Works are completed 1 October 2024 and the Valuation Office issues a certificate with an RV of £3,000. This has been calculated by taking the value of the new extension and offsetting the value of the demolished side extension as these are associated value suppressing works. The demolition of the rear store does not appear to be associated with the qualifying works and so is not taken into account when calculating the RV for certification.

10. Example 10 — office suite RV £15,000 ITMS £100 — occupier installs air conditioning and a subsequent proposal results in a lower £m2.

(a) The occupier installs air conditioning in the office suite, works are completed on 18 July 2025, the air conditioning add 5% to the rounded RV, £750. The Valuation Office issues a certificate at RV £750 from 18 July 2025 to 17 July 2026.

(b) The occupier submits a proposal and following discussions the £m2 is reduced from £100 to £90. The air conditioning still uplifts the value by 5%, £675. The Valuation Office issues a revised certificate showing an RV of £675 from 18 July 2025 to 17 July 2026.

11. Example 11 — an industrial property with an RV of £252,400 which is rounded down to £250,000.

(a) On 1 June 2025, the occupier adds a small mezzanine which adds £1,000 to the valuation giving an RV of £253,400 which rounds to £252,500. The Valuation Office certifies an RV of £2,500 from 1 June 2025 to 31 May 2026. The certified RV reflects the increase in the RV arising from the works which in this case, because of the rounding rules, is higher than the value added by the qualifying works.

12. Example 12 — a Date of Schedule case on a property with an MCC effective date in the 2023 Rating List post 1 April 2025.

(a) The occupier adds an MCC which was completed in the 2023 Rating List. As this is a compiled list inaccuracy, the RV will be increased in the 2026 Rating List with effect from date of schedule. The Improvement Relief certificate will be required to have a £nil value on 1 April 2026. The certificate will be able to generate 3 lines which will include R23 list details, the R26 Compiled List details at £nil value and a further line effective from the DoS date. You will also need to consider Transitional Relief for 1 April 2026 compiled list value.

Appendix

If, having read these examples and applied the guidance, there remains any doubt as to the approach to be taken please consult with your Unit Technical Lead or Chief Valuer Group Technical Adviser.