Explanatory note

Paragraph 2 of Schedule 6 to the Local Government Finance Act 1988 (“the 1988 Act”) provides that the rateable value of a non-domestic hereditament shall be ascertained by reference to the rent at which it is estimated the hereditament might reasonably be expected to be let from year to year.

In those cases where there is no more direct evidence of rental value, the rateable value of a non-domestic hereditament is instead ascertained by decapitalising the estimated total capital value of the hereditament (this is known as “the contractor’s basis of valuation”). The decapitalisation rates are prescribed by Regulations made by the Secretary of State under paragraph 2(8) of Schedule 6 to the 1988 Act. The principal Regulations made under this power are the Non-Domestic Rating (Miscellaneous Provisions) (No 2) Regulations 1989 (as amended) (“the 1989 Regulations”), Regulation 2 of which prescribes the current rates.

Insofar as it relates to Wales, the power to make Regulations under paragraph 2(8) of Schedule 6 to the 1988 Act has been transferred to the National Assembly for Wales by virtue of the National Assembly for Wales (Transfer of Functions) Order 1999. In reliance on this power, the National Assembly for Wales is making these Regulations to amend, with effect from the 1st of April 2005, the decapitalisation rates prescribed by Regulation 2 of the 1989 Regulations.