what are business rates
Business rates are a tax that businesses pay on most non-domestic properties, such as shops, offices, pubs, warehouses, and factories in the UK. They’re similar to council tax but for commercial premises, and the money helps fund local services through your local authority.
Quick Scoop
What are business rates?
- Business rates (also called non-domestic rates) are a property-based tax charged on buildings and spaces used for business purposes.
- They usually apply if you operate from premises like a shop, office, café, workshop, warehouse, or industrial unit.
- They’re set under rules from central government but billed and collected by local councils, who use them alongside council tax and government grants to fund local services.
Who has to pay?
- You normally pay business rates if you occupy non-domestic property, whether you own the building or rent it.
- Some properties are exempt or get special treatment, for example certain farm buildings, places of worship, or very low-value premises under specific relief schemes.
- If you run a business from home, you usually only pay business rates if a clearly defined part of your home is used mainly for business (for example, a converted shop-front or separate office area), otherwise only council tax applies.
How are business rates calculated?
At a high level, your bill is:
Business rates = rateable value × multiplier − any reliefs.
- Rateable value : an estimate of your property’s annual rental value on the open market at a set valuation date (in England, assessed by the Valuation Office Agency).
- Multiplier : a pence-per-pound figure set each year by government, with a standard multiplier for larger premises and a small business multiplier for lower-value properties.
For recent years, typical England multipliers have looked like:
| Year | Standard multiplier | Small business multiplier |
|---|---|---|
| 2025–2026 | 55.5p | 49.9p |
| 2024–2025 | 54.6p | 49.9p |
| 2023–2024 | 51.2p | 49.9p |
Reliefs and discounts
There are several schemes that can reduce what you actually pay:
- Small Business Rate Relief : for premises with a relatively low rateable value (for example under £15,000), often giving tapered or full relief.
- Retail, Hospitality and Leisure (RHL) relief : percentage discounts for qualifying shops, cafés, bars, restaurants, and similar venues, with specific rates and thresholds that change over time.
- Other local or sector-specific reliefs : such as charitable rate relief, rural rate relief, and transitional relief to soften big jumps after revaluations.
From April 2026, the government plans to move to new, lower RHL multipliers (for example, around 38.2p for smaller RHL premises and 43.0p for larger ones) to smooth out the “cliff-edge” seen with the current relief system.
Why are business rates in the news and on forums?
- Many small business owners feel business rates are a major fixed cost that’s hard to reduce, especially when margins are tight and online competitors don’t carry the same physical property burden.
- Forum discussions often revolve around:
- Whether a rateable value seems too high
- How to check you’re on the right multiplier
- Finding out if you qualify for more relief or if you can challenge your valuation
- There’s also ongoing debate about how fair the system is, particularly for high-street businesses vs. online-only operations, which keeps business rates in the “trending topic” mix whenever new budgets or revaluations are announced.
A typical small café owner might discover that challenging their rateable value or claiming extra RHL or small business relief significantly lowers their bill, turning a near-break-even operation into a viable one.
Bottom note: Information gathered from public forums or data available on the internet and portrayed here.
