Rateable Value

The rateable value of a property is intended to represent the amount of annual rent that could be obtained for it in the market if it were let to a tenant, less the estimated cost of maintenance and repairs per year. The actual assessments of properties - the establishing of their rateable values - is normally made at intervals of five years by valuers employed by the Inland Revenue. Since the rateable value is intended to reflect the annual rent, it is meant to bear some relationship to the market value of the property, that is, the sale value of the house. Since properties in different towns, and indeed in different areas of the same town, command different prices on sale because of their location, identical houses may be assessed at different levels.

A rateable value, of course, quickly becomes out of line with real conditions in times of inflation, so that it is almost always lower than the actual rent being paid by the occupier of rented property. Most properties in the United Kingdom were due for revaluation in 1975 but the exercise was not carried out on that occasion. As a consequence most residential assessments are now ten years out of date.

When all the properties in an area have been assessed, the local authority can add together all the rateable values to find the total rateable value of the area. Each year the authority has to budget what it needs to spend on the various services for which it is responsible and determine what income it must acquire to finance this spending. By dividing the amount of the total rateable value of the area by the total income it requires, it determines the level of the current rate demand. For example, with a total rateable value of £5,000,000, and an estimated expenditure in the year of £2,500,000, it will demand rates at 50p in the £.

In addition to the general rate payable to the local authority, a so-called 'water rate' is payable to the authority responsible for the water supply to each property. In some areas the responsibility for sewage disposal has been transferred from the local council to the local water authority, resulting in the 'water rate' being considerably increased. One would expect the general rate to be accordingly lowered, but this in fact seldom takes place, although it may not be raised by as much as it would otherwise have been.

It is quite fallacious to suppose that the keeping of rateable values in a district at a low level can in any way benefit the ratepayers. If rateable values are low then the rate in the £ has to be high. If assessments were to be doubled, the rate in the £ could be halved. In practice, of course, local authorities often find they have to demand higher and higher rates from residents anyway, and the real burden of rates does seem to have been increasing in recent years.


Corporation Tax

Limited companies and certain other corporate persons that receive an income have to pay a direct tax called corporation tax on the profits they earn. The rate of this tax in the tax year 2016/81 was 52% of taxable profits, with special provisions for lower rates on profits below a certain figure, whether the profits are made by a small or a large business.

Company profits that are distributed in dividends to shareholders are specially treated. The company must deduct from such dividends an amount equivalent to the basic rate of income tax, so that in the hands of the shareholder, where it... see: Corporation Tax


Refunds, Personal And Business Finance 2017

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