Business rates in multi-occupied properties: proposals to end "the staircase tax"

United Kingdom

The Department for Communities and Local Government’s consultation on legislative changes to reinstate the pre-Mazars method of assessing “hereditaments”, including backdating provisions, is due to end shortly and all responses should be submitted by 23 February 2018.

Mazars Case

The Supreme Court’s decision in Woolway (VO) v Mazars 2015 fundamentally changed the assessment of a “hereditament” for business rates purposes. Specifically, two contiguous parts to a property occupied by the same business are now assessed as one hereditament only if both parts are accessible without going onto other property, or using a common corridor or stairwell. A method of assessment that has given rise to the term “the Staircase Tax”.

The Mazars decision resulted in some ratepayers losing the benefit of “quantum discounts” offered by landlords for taking more floorspace, and other ratepayers losing the benefit of Small Business Rates Relief because one property is assessed as two hereditaments. Professional bodies called for a return to the pre-Mazars position, and the government is now proposing to legislate to reinstate the Valuation Office Agency’s method of assessment before the Mazars case.

Draft Legislation

The draft legislation provides that where a business occupies two or more parts of a property that are contiguous, then these parts will be assessed as a single hereditament. Parts of a property will be contiguous where “some or all of a wall of one hereditament forms all or part of a wall of the other hereditament”, or “some or all of the floor of one hereditament forms all or part of the ceiling of the other hereditament”, or where a chain of contiguity is established. There will be two exceptions to this method of assessment where parts of a property are:

  • used for wholly different purposes the parts will be assessed as separate hereditaments; or
  • separated by a common area or public highway and have a strong functional connection the parts will be assessed as a single hereditament.  


The government has recognised that, following the Mazars case, some amendments to the ratings lists may have been backdated to 1 April 2010. Therefore, the new proposals will include a right for ratepayers to submit amendments to the April 2010 rating list, although the right will be limited to ratepayers who believe that two or more hereditaments should be merged.