Renewable Energy: Non-domestic Rates

HM Treasury written question – answered on 1st December 2017.

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Photo of Zac Goldsmith Zac Goldsmith Conservative, Richmond Park

To ask Mr Chancellor of the Exchequer, what methodology is used to calculate the business rate liabilities of (a) solar power and (b) Good Quality gas CHP; and what the rationale is for that methodology.

Photo of Zac Goldsmith Zac Goldsmith Conservative, Richmond Park

To ask Mr Chancellor of the Exchequer, how battery storage technologies installed in commercial premises are assessed for business rates.

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

Business rates liabilities are based on the rateable value and the non-domestic rating multiplier set by the Government.

The Valuation Office Agency (VOA) determines the rateable value of the property using three broad methods: a rentals basis; receipts and expenditure (R&E); and a contractor’s basis, that is to say, a building's replacement costs. Rating case law requires that a hierarchy of use is adopted, in the order shown above; i.e. only when a rentals basis is not possible should the valuer adopt R&E, with the contractor’s basis being the method of last resort.

Solar panels are valued using either the R&E method or the contractor’s basis, depending on the circumstances.

Good quality CHP is partially-exempt from rating. The rateable parts are valued using either the R&E method or the contractor’s basis, depending on the circumstances.

In addition, if the solar panels or good quality CHP is a qualifying microgeneration (below 50kW) installation there is a temporary exemption from rating which means new schemes aren't assessed until the next revaluation takes place.‎

Battery storage technologies are valued using the contractor's basis.

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