Annual value

Updated: Aug 20, 2021

The annual value of an asset. whether it be real property such as a house or land, etc., or personal property such as a business interest or a share portfolio, is the amount that accrues annually by right of ownership. A distinction is normally made between gross annual value and net annual value, the former being before, and the latter after, deduction of expenses incurred by ownership. Generally speaking, no asset has a fixed annual value in so far as both income and expenditure must obviously fluctuate, so the term is normally only used with reference to the notional benefit from possessing property which is kept for personal, rather than for commercial. purposes.

At one time tax was levied, under the now defunct Schedule A, on the annual value to the occupier of the house in which he lived. Rates are still payable on a similarly notional value, referred to as the rateable value of a dweUing house or commercial premises. The value is calculated by reference to the rack rent, i.e. the amount of rent that the the open market, assuming vacant possession and no encumbrances, and that the landlord is responsible for fixtures and outside repairs and the tenant for the maintenance of the inside of the property.

Reference: The Penguin Business Dictionary, 3rd edt.

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James Knight
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James is the Editor of Education for Invezz, where he covers topics from across the financial world, from the stock market, to cryptocurrency, to macroeconomic markets.... read more.