Business Rates and Retail Property

Business rates are a tax on non-domestic property in England and Wales, collected by local councils and based on a property's rateable value — an estimate of the annual rent the property could achieve on the open market at a set valuation date. For retail shops, the Valuation Office Agency (VOA) determines this figure using the ITZA method, the same zoning approach used by commercial surveyors across the profession.

Understanding how the VOA arrives at your rateable value is essential if you want to check it, challenge it, or simply understand what you're paying for.

How the VOA Uses ITZA

The VOA measures your shop's ground floor and divides it into zones, each 6.1 metres (20 feet) deep from the frontage. Zone A — the strip closest to the shop window — carries the highest value. Each subsequent zone is worth half the previous one, following the halving-back convention.

The VOA then applies a Zone A rate derived from comparable evidence: rents actually paid for similar properties in the same area around the valuation date. Your total rateable value is essentially the Zone A rate multiplied by your property's total ITZA figure, plus any adjustments.

In practice, the VOA's valuer will:

1. Measure the property and assign floor areas to each zone
2. Calculate the ITZA for each zone (area ÷ division factor)
3. Sum the ITZA figures across all zones and ancillary areas
4. Apply the appropriate Zone A rate from local comparable evidence
5. Make adjustments for any property-specific factors

The 2026 Revaluation

Business rates revaluations now happen every three years. The 2026 revaluation, which took effect on 1 April 2026, is based on rental values as at 1 April 2024. This means the rateable value on your bill reflects market rents from two years ago — not today's market.

Overall retail rateable values increased by 9.3% under the 2026 revaluation, rising from £14.7 billion to £16.1 billion across England and Wales. However, this national average masks significant regional variation. Prime high street locations in the South East saw larger increases, while some secondary pitches in the North experienced decreases reflecting ongoing structural changes in retail.

You can check your property's rateable value on the VOA's "Find a business rates valuation" service on GOV.UK.

Checking Your Valuation

The VOA publishes a summary valuation for each property, showing the measurements, zone areas, Zone A rate, and any adjustments or allowances applied. This is the first place to look if your rates bill seems too high.

Common issues to check include:

Incorrect measurements

Are the floor areas correct? The VOA measures to Net Internal Area (NIA) standards. If your property has been extended, reduced, or reconfigured since the last measurement, the areas may be wrong.

Wrong Zone A rate

Is the Zone A rate consistent with comparable properties nearby? If a neighbouring shop with similar characteristics has a lower rate, that's worth investigating.

Missing adjustments

Has the VOA applied appropriate adjustments for factors like irregular shape, restricted access, poor frontage, or limited loading facilities? These can reduce the rateable value by 5–20%.

Ancillary areas

Are upper floors, basements, or storage areas valued at appropriate division factors? Over-valuation of ancillary space is a common error.

Challenging Your Rateable Value

If you believe your rateable value is wrong, you can challenge it through the VOA's Check, Challenge, Appeal process:

1. Check — Register on the VOA's business rates valuation account, claim your property, and review the valuation details
2. Challenge — If you find an error, submit a formal challenge with evidence explaining why the rateable value should be different
3. Appeal — If the VOA doesn't resolve your challenge satisfactorily, you can appeal to the Valuation Tribunal

Having your own ITZA calculation to hand is invaluable when challenging a rateable value. It allows you to compare the VOA's figures zone by zone and identify exactly where any discrepancy lies.

Worked Example: Checking a Rateable Value

Suppose the VOA has valued your shop with a rateable value of £45,000 and you want to verify this. Your property has:

Dividing the rateable value by the total ITZA gives an implied Zone A rate:

£45,000 ÷ 550.00 = £81.82 per sq ft Zone A

You can then compare this Zone A rate against comparable evidence for similar shops in your area. If comparable units are achieving £70–75 per sq ft, you may have grounds for a challenge.

Calculate Your Own ITZA

Use our free ITZA Calculator to run your own valuation and compare it against the VOA's figures. Switch to Zone A Rate mode, enter your current rent, and the calculator will derive the implied Zone A rate for you.