Business rates and council tax are formulated in different ways, making it difficult to compare the two regards which is higher.
Council tax is charged against residential properties and is based on a banded pricing structure.
The exact banding structure varies across England, Wales, Scotland and Northern Ireland, as an example, In England properties are split into eight bands (A-H) with property values banded as below. Local Authorities allocate their own amounts due for each council tax band:
A Up to £40,000
B More than £40,000 and up to £52,000
C More than £52,000 and up to £68,000
D More than £68,000 and up to £88,000
E More than £88,000 and up to £120,000
F More than £120,000 and up to £160,000
G More than £160,000 and up to £320,000
H More than £320,000
The value of a property is decided at a specific point in time and is then placed into the corresponding band which determines the amount to be paid as each band is charged a different amount.
Business rates are charged against non-residential (commercial) properties with the amount due calculated using a properties ‘rateable value (RV)’. This is determined by the open market rental value of the property on a specific date.
The RV is then put with the multiplier which determines the percentage of the RV that will be billed on. The multiplier changes each year in line with Consumer Price Index (CPI) and is set by the Government.
The current multiplier in England is 50.4 , as an example, if you had an RV of £10,000 the Business Rates payable would be calculated as follows :
£10,000 x 0.504 = £5,040 due in business rates for the year.