A Guide to Business Rates

What are business rates?

Business rates are a tax charged on non-domestic properties in the UK. This includes offices, shops, pubs and factories. You have to pay business rates whether you own or rent any property used to run a business, rather like paying council tax for living in a domestic property.

How are business rates calculated?

The Valuation Office Agency (VOA) will start by working out a property’s rateable value (or rental value). This value is then passed on to local councils, who calculate a business rates bill for a property by multiplying the rateable value by a ‘multiplier’ figure to create a final sum. The multiplier figure for the 2024-2025 tax year is 54.6p for the standard rate and 49.9p for small businesses.

Because the rateable value is based on the property's rental value, you’ll often have to pay higher business rates for properties with high rent. However, other factors affect the proportion of rates you pay, such as where your business is based and how many people it employs.

If you think your business rates bill needs to be corrected, you can challenge the property's rateable value via the gov.uk website.

How to work out business rates

You’ll receive an annual business rates bill from your local council for the next financial year, usually around March or April.

You can choose to pay your bill in monthly instalments via direct debit, via phone or at a bank. It’s worth checking with your local council, as the details of how you can pay may differ depending on your location.

Does everyone pay business rates?

All businesses that use a commercial (non-domestic) property pay rates, including shops, offices, pubs, warehouses, and factories. Your council uses the money generated through business rate bills to fund local services, including waste disposal and street lighting.

Are there any exemptions to business rates?

Several exemptions apply to business rates, such as fish farms, agriculture, and buildings used for religious worship. You also don’t need to pay business rates on buildings that have been empty for up to three months.

What is the small business rates relief?

Several forms of relief are available to help businesses with their business rate bills, such as charitable business rate relief and rural business rate relief.

What if I work from home?

If you work from home or if you don’t employ others to work from your home, then you may also be exempt from paying business rates. You can browse the full guidelines regarding these business rates on the gov.uk website.

What if I can’t pay my business rates bill?

If you struggle to pay your business rates bill, check to see if you’re paying the right amount and eligible for any exemptions or relief outlined above.

If you still think you can’t afford to pay the bill, it’s definitely worth getting in touch with your local council as soon as possible so they can help. If you ignore your bill and the letters reminding you to pay your bill, you could face larger penalties.

Are business rates more than council tax?

Consider business rates as the business alternative to domestic council tax – you pay business rates to the council for any properties used to run your business and council tax for any properties you live in.

You may occasionally have to pay both business rates and council tax on the same property, though this is rare and only applies to cases such as if a shop owner lives above the business.

What other taxes do SME owners need to pay?

If you run a small business, you’ll also have to pay other taxes besides your business rates bill. We’ve linked to handy guides for each to help you along:

• VAT

• Corporation Tax

• Income Tax for your employees

• National Insurance for your employees