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Business Rates: Improvement Relief

The qualifying works condition

Qualifying works must result in a positive change in the rateable value of the hereditament to be eligible for relief. Any improvements which result in no overall change in rateable value or a reduction due to simultaneous value-suppressing activity, such as demolition works, are not eligible for the relief.

To meet the definition of qualifying works, the improvements must result in one or more of:

  • an increase to the size of a building or the internal useable space within it
  • improvements or upgrades to the property's physical state, such as the addition of heating, air conditioning, or raised flooring
  • the addition of other rateable plant and machinery

Illustrative examples of improvements resulting in an increase in rateable value which may meet the qualifying works condition include:

  • the addition of insulation or new lining to a previously uninsulated industrial property
  • a physical extension to a property
  • the removal of a structural wall within a shop, so that the area previously behind the wall is then used for retail instead of storage
  • the addition of a structural mezzanine retail area in a retail warehouse

A change of use alone (e.g. from a shop to a restaurant) will not constitute qualifying works. It is, however, possible that works such as the examples given above which are associated with a change of use may still be eligible. The addition of land to an existing property, the creation of a new hereditament next to the existing property, and general maintenance and repairs would also not constitute qualifying works. A new building within an existing hereditament, such as a new building on a large factory site, would be treated in the same way as an extension or improvement to an existing building, and meet the definition (provided there was an increase in the rateable value of the hereditament which the property comprises).

If a ratepayer undertook a scheme of works resulting in the division of a property into multiple different hereditaments, this may still qualify for relief if the other tests are met. As an example, if the ratepayer for an industrial unit undertook qualifying works and also divided part of their property into a separate hereditament for use by a different occupier, the works may still qualify, but only in respect of the hereditament the same ratepayer continues to occupy. This is linked to the occupation condition, which is described in more detail below.

The intention of the relief is to support occupiers making improvements to their existing business premises. It is not the intention to subsidise general commercial property development, such as new construction or refurbishment. Given that such major development generally results in properties being removed from the rating list, the definition of qualifying works excludes circumstances where the property was not included in a rating list for part or all of the period during which the works were undertaken.

Illustrative examples which may not meet the qualifying works condition include:

  • construction of a new building resulting in a new rating assessment (i.e. a new hereditament)
  • a property removed from the rating list while substantial redevelopment is undertaken and returned to the list when the works are complete
  • replacement of an old technology, such as upgrading to more modern insulation, with no resulting change in rateable value

Qualifying works must be commenced on or after 1 April 2024. Works commenced before this date and completed after it are not eligible. The VOA will determine whether the qualifying works condition has been met. If it is satisfied that the condition has been met, it will issue a certificate of the change in rateable value which is attributable to the qualifying works.