Business rates are a tax on property used for business purposes. So, if you run your business from a commercial property (or in some cases, if you work from home), it’s important that you understand business rates and how much you need to pay.
The following article covers:
- what are business rates?
- how business rates are calculated
- how to use the VOA business rates checker
- small business rates relief
- relief for retail, leisure, and hospitality businesses
- business rates exemptions
- how to use a business rates calculator
- business rates if you work from home
- the government’s plans to scrap business rates
What are business rates?
Business rates are taxes designed to help fund services in your local authority. The government charges business rates on properties like offices, shops, pubs, and warehouses – most non-domestic properties will need to pay business rates.
They may also be charged where only part of a building is used for non-domestic purposes.
How are business rates calculated?
Business rates are calculated using a property’s ‘rateable value’. The rateable value is a property’s estimated value on the open market. The last revaluation, which came into effect on 1 April 2023, refers to values as of 1 April 2021. Revaluation is conducted by the Valuation Office Agency (VOA) and usually happens every five years.
How much are business rates?
It’s possible to estimate your business rates by multiplying your property’s rateable value by the relevant number (minus any business rate relief you’re eligible for).
| Year | Standard multiplier* | Small business multiplier* |
| 2024-2025 | 54.6p | 49.9p |
| 2023-2024 | 51.2p | 49.9p |
| 2022-2023 | 51.2p | 49.9p |
Businesses with premises with a rateable value above £51,000 pay the standard multiplier, while those with a rateable value below £51,000 pay the small business multiplier.
*These rates apply to properties in England
How to work out business rates – an example
You run a business with a premises that has a rateable value of £21,000. Using the small business multiplier (49.9p for each pound your premises is valued at), your total business rates would be £10,479.
On the other hand, if your business premises have a value of less than £15,000, you’d be able to apply for small business rates relief to reduce your bill. Read more about business rates relief for small businesses below.
Business rates in Wales, Scotland, and Northern Ireland
Properties in Wales pay a business rates multiplier of 56.2p for 2024-25.
In Scotland:
- the basic property rate is 49.8p (for properties valued at less than £51,000)
- the intermediate rate is 54.5p for properties valued between £51,000 and £100,000
- the higher rate is 55.9p for properties valued above £100,000
There’s a slightly different system in Northern Ireland whereby the rateable Net Annual Value (NAV) of a property is multiplied by combined non-domestic regional and district rates.
When do you have to pay business rates?
In England, Wales, and Scotland, you’ll receive a business rates bill from your local authority each year in February or March. The bill will be for the following year and as with council tax, you can pay in 10 monthly instalments (although you can choose to pay over 12 months). Scottish businesses can pay monthly or in one lump sum.
In Northern Ireland, business rates bills are sent out in April, with an option to pay monthly or in one lump sum.
Using the VOA business rates checker
The government has a tool you can use to check the VOA’s rateable value for your property.
This is a useful tool, because if you think that your rateable value is wrong, your business rates could be too.
Using the tool, you can request changes to property or valuation details, see the valuation details of other properties, and apply to change the rateable value.
You’ll need to use this tool if you want to estimate your business rates.
What is the small business rates relief?
Reliefs are available for some properties in England – the most useful for small firms is the small business rate relief. You can get this relief if your property has a rateable value of less than £15,000, and generally if your business only uses one property:
- full relief is available on properties with a rateable value of £12,000 or less
- for those between £12,001 and £15,000, relief goes down gradually from 100 per cent to zero per cent
If you’re a small business but you don’t qualify for small business rate relief, your bill will still be worked out using the lower small business multiplier (for properties with a rateable value below £51,000).
There are other business rates reliefs available, including the rural rate relief and charitable rate relief. You can read more about these on the government website.
Business rates relief for retail, hospitality, and leisure businesses
If you run a retail, hospitality, or leisure business in England, such as a shop, restaurant, or gym, you can get 75 per cent off your business rates for the 2024-25 tax year.
The relief is capped at £110,000 for each business. To claim this relief, you’ll need to contact your local authority.
Business rates calculator
If you want to estimate your business rates bill, you’ll need to find out your property’s rateable value.
With this you can find the correct multiplier, which will depend on the rateable value. Then, deduct any reliefs you’re entitled to.
You can use the government’s business rates calculator.
This article is a guide only – but for more help with business rates, the government says you can contact qualified surveyors. They list the Royal Institution of Chartered Surveyors (RICS), the Institute of Revenues, Rating and Valuation (IRRV) and the Rating Surveyors Association.
Is there a business rates exemption?
If you can get relief on your business rates, it could mean you’re exempt from paying. However, in most cases it will just be a reduction.
There are some buildings that are totally exempt from business rates:
- agricultural land and buildings
- buildings used for the welfare or training of disabled people
- church halls or buildings registered for public religious worship
Business rates and working from home
You won’t generally have to pay business rates if you use a small part of your home for business purposes (for example, if you use a room as an office).
But in some circumstances you’ll have to pay business rates on top of council tax – if, for example:
- your property’s split into domestic and business parts, for example in the case of a flat above a shop
- you sell things to people who visit the property
- you employ anyone at your property
- you’ve made changes to your home so you can run your business (like converting your garage)
If you’re not sure whether or not you should be paying business rates, you should contact the VOA.
Will a Labour government scrap business rates?
Ahead of its election victory in July 2024, the Labour Party set out a plan to scrap the business rates system.
Part of the party’s manifesto, the policy was light on detail but promised to level the playing field between high street and online giants as well as tackling empty properties and supporting entrepreneurship.
As yet, the new government has not shared any information on how it plans to review business rates.
Research by Sainsbury’s and Development Economics suggests that a 20 per cent reduction in headline business rates would save retailers £1 billion in the first year, helping to safeguard or create more than 17,000 jobs.
According to the study, the significant cost to the government would be made up by increased economic growth in the future.
Do you have any unanswered questions about business rates? Let us know in the comments below.
More useful articles for small businesses
- Corporation tax: a guide for small businesses
- A guide to dividend tax and the dividend tax rate
- A guide to going self-employed in the UK
- Why do I need business insurance?
Photograph: Helen Hotson/stock.adobe.com
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