What Is Business Rates?
Business rates are a property tax on non-domestic premises. Learn how they are calculated, what reliefs are available, and when you must pay.
Key Takeaways
- Business rates are charged on most non-domestic properties — offices, retail, warehouses, factories
- The amount is based on rateable value set by the Valuation Office Agency (VOA)
- Small Business Rates Relief can eliminate rates for eligible businesses with rateable value under £12,000
- You can challenge your rateable value through the Check, Challenge, Appeal process
What business rates are
Business rates (formally non-domestic rates) are a property tax levied on most non-domestic premises — shops, offices, warehouses, factories, and other commercial properties. They are collected by local councils and partly redistributed centrally. If you occupy commercial premises — own, rent, or operate from them — you will almost certainly be liable for business rates unless you qualify for a relief.
How the bill is calculated
Your business rates bill is calculated by multiplying the rateable value of the property by the multiplier (pence in the pound) set by central government. The rateable value is an estimate of the annual open market rent for the property assessed by the Valuation Office Agency (VOA). The current standard multiplier is approximately 51.2 pence per £1 of rateable value for large businesses. A property with a rateable value of £20,000 would have a base annual rates bill of approximately £10,240 before any reliefs.
Small Business Rates Relief
If your property has a rateable value below £12,000 and it is your only business property, you pay zero rates — 100% relief. Between £12,000 and £15,000, you receive tapered relief on a sliding scale. Multiple properties make the rules more complex — only the main property gets SBRR. Apply to your local council to claim SBRR — it is not applied automatically in all cases.
Other reliefs
Retail, Hospitality and Leisure Relief: significant temporary relief — check the current year's percentage as it changes annually. Empty property relief: properties empty up to 3 months (6 months for industrial) pay no rates; beyond that, full rate applies. Charitable rate relief: registered charities pay only 20% of the full rate. Rural rate relief: 50-100% relief for certain property types in rural areas with populations under 3,000.
Challenging your rateable value
If your rateable value seems too high, challenge it through the Check, Challenge, Appeal (CCA) process via the VOA website. Start with the Check stage — reviewing the details the VOA holds. If there are errors (wrong floor area, missing information), corrections may reduce your valuation. A formal Challenge sets out why the valuation is wrong. Appeals to the independent Valuation Tribunal are the final stage.