What are Business Rates? Calculator and Small Business Rate Relief explained

Calculate your business rates, including rateable value, multipliers, for 2023, and find out whether your business is eligible for business rates relief or exemption.

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What are business rates?

Similar to council tax, business rates are charged by local authorities to finance public services. Any firm that occupies non-domestic or commercial properties must pay business rates. The property occupier, either the owner or the leaseholder, pays the business rates.

If you only use part of a building for non-domestic purposes, for example, a shop with a residential flat above it, the part used for business will still require payment of business rates.

Similarly, if you work from home, you may have to pay business rates on the section of your house that is used for work purposes.

New business rates were introduced on 1 April 2023 for the first time in three years. Business owners now need to budget accordingly for the new valuation, as the impending recession has put extra pressure on cash flow.

Government aid will be given via an updated and expanded Small Business Rates Relief (SBRR) scheme. However, March's Spring Budget gave little else in the way of business rate support.

If you’re a small business owner, you might be eligible for business rates relief through the SBRR. This relief cuts the amount of business rates you have to pay, lowering your overheads and freeing up cash for investing in growth. We’ll explain more about how to qualify for the scheme in the article below.

Business rates revaluation for 2023

Business rates are regularly updated by the Valuation Office Agency (VOA). On April 1 2023, new rateable values (the metric used to calculate a business rates bill) determined by the VOA came into effect on all non-domestic properties in England and Wales.

On average, the total rateable value on the local lists for England and Wales has increased by 7.1%. But while the figure might send alarm bells ringing, a rise in your rateable value does not mean your business rates bill will have gone up by a similar amount. Local councils use the rateable value to calculate a property’s business rates bill, so your final bill will ultimately depend on where your business is based.

Now that the new financial year has begun, we recommend getting an estimate of what your business rates bill is likely to be this year through the Find a Business Rates Valuation Service on GOV.UK.

If you have not done so already, we also recommend setting up a Business Rates Valuation Account. This can be used to inform the VOA about any changes to your property details like floor area sizes and parking. It can also be used to appeal your new rateable value if you think it has been set too high.

How to calculate business rates

To calculate your business rates you need to multiply the rateable value for your business with the ‘multiplier’ (also known as ‘poundage’) set by the government.

Rateable value is the value given on a premises by the Valuation Office Agency, which is based on its probable annual market rent.

These values are reviewed every five years and take the size of the property and its usage into consideration, in addition different parts of the premises may be valued at different levels. The latest rateable value figures are estimates of the property's open market rental value as of 1 April 2015.

Multipliers are the number of pence per pound of rateable value that you’ll have to pay in business rates, before any relief or discounts are deducted.

These are reviewed every year by the government in line with inflation. As part of a government support package for SMEs, the business rates multipliers have been frozen at 49.9p and 51.2p in 2023-24.

Current business rates multiplier values

YearStandard MultiplierSmall Business Multiplier
2023 to 202451.2p49.9p
2022 to 202351.2p49.9p
2021 to 202251.2p49.9p
2020 to 202151.2p49.9p
2019 to 202050.4p49.1p
2018 to 201949.3p48.0p
2017 to 201847.9p46.6p
2016 to 201749.7p48.4p

It’s worth knowing how to calculate your business rates yourself to ensure you’re paying the right amount, and to plan your financial year ahead.

Step 1. Search for a property's rateable value by postcode
Step 2. Find the correct ‘multiplier’ for the size of your business and location
Step 3. Times your rateable value by the correct ‘multiplier’

Example:

Jaya has a business in Wales. Let's say the rateable value of her business is £8,000. She should use the 2022 to 2023 small business multiplier (49.9 pence) to estimate her business rates as follows:

£8,000 (rateable value) x £0.499 pence (multiplier) = £3,992 (basic business rates).

As her rateable value is lower than £15,000, Jaya may also be able to reduce her bill by applying for Small Business Rates Relief (SBRR). More on what that means below.

Business rates are handled differently if:

Small Business Rates Relief (SBRR)

The cost of living crisis has put huge cost pressures on startups and small businesses. Inflation is currently at 11.1%, and the rising costs of rent and energy bills – combined with less consumer spending power – have made it more difficult for businesses to afford business overheads such as property costs.

Small Business Rate Relief (SBRR) is a national discount scheme administered by local councils on behalf of the UK Government. It is awarded on a sliding scale depending on the size of your Rateable Value (RV).

In England, you can get SBRR if you only occupy one property with a rateable value of less than £15,000. Rates relief is handled differently if your property is in Scotlandyour property is in Wales or your property is in Northern Ireland.

If your property has a rateable value of £12,000 or less you will get 100% relief from business rates. This rate will gradually decrease from 100% to 0% for properties with a rateable value between £12,001 to £15,000.

For example:

  • A property with a rateable value of £13,500 will net you 50% off your bill
  • One with a rateable value of £14,000 will give you 33% off

If you have a second property you can keep relief on your main property for one year. After 12 months, you can still qualify for SBRR as long as:

  • None of your other properties have a rateable value of above £2,899
  • AND the combined rateable value of all your properties is less than £20,000 (£28,000 in London).

The rateable values of the properties are then added together and the relief applied to the main property. You can find out if you qualify for small business rates relief by contacting your local council.

My small business doesn't qualify for SBRR. What can I do?

In England, even if you do not qualify for SBRR, you can still receive a discount on business rates as long as your property has a rateable value below £51,000.

In this scenario, your bill will be calculated using the small business multiplier, which is lower than the standard one (49.9p versus 51.2p.)

Autumn statement 2023: what was announced for Business Rates Relief?

Following the Business Rates Review, the government announced that it will deliver a 100% relief for eligible low-carbon heat networks with individual rates bills. This was previously provided through a discretionary relief scheme operated by billing authorities. The changes triggered by the Autumn Statement have now given this measure mandatory statutory footing.

Access to the heat network relief will remain unchanged from the previous discretionary scheme except that now local authorities will be able to benefit from this mandatory relief from 1 April 2024.

Non-Domestic Rating (Small Business Rate Relief)

Changes were also announced for the Small Business Rate Relief. New regulations replace an earlier stage of regulations that outlined the conditions to apply to the SBRR and the value of the relief. Moreover, the Chancellor announced a package of support worth £4.3b over the next five years to support small businesses and the high street. The small business multiplier will now be frozen at 49.9p.

Retail, Hospitality, and Leisure (RHL) Rates Relief Scheme

Under previously announced legislation, hospitality, leisure and retail companies received a 50% discount on business rates bills for the 2022-23 tax year. For the 2023-24 tax year, the relief for hospitality, leisure and retail companies has been extended and increased.

Since April 1 2023, as part of the government's inflation support pledge, all eligible firms now receive 75% off their business rates bills, up to £110,000 per business. Following the Autumn Statement announced on 22 November 2023, the scheme will be extended for a fifth year into 2024-25.

According to a government press release, this means a typical small shop with a rateable value increasing from £20,000 in 2017 to £21,500 in 2023 will receive RHL relief worth around £8,000 (subject to the £110k cash cap per business).

Nurseries are also entitled to the same discount. To be eligible, your business must be on Ofsted’s Early Years Register, provide care and education for children up to five years old (the early years foundation stage), and not be a local authority-run nursery.

If these new business rates relief measures apply to your business, you do not need to take any action. Your local council will apply your discount automatically, which may involve re-issuing your bill.

Enterprise Zone relief

If you’re starting a business within an enterprise zone or relocating to an enterprise zone then you qualify for enterprise zone relief and access up to £55,000 a year for over five years.

Enterprise zones that are included within this relief are listed here. To find out how to apply for the relief you need to contact your enterprise zone area.

Charitable rate relief

Charities and small community sports clubs are entitled to get their business rates bills reduced by 80%. Other non-profit organisations can apply for up to 100% ‘discretionary relief’, which is decided by local councils.

Rural relief

Businesses in a rural area may be able to claim rural rate relief of between 50% and 100% off your business rates.

That covers:

  • Retailers with a rateable value below £8,500
  • Pubs or petrol stations with a rateable value of up to £12,500
  • Any other rural retail businesses with a rateable value of up to £16,500

To qualify for rural rate relief, your business must be based in area that features in the rural settlement list for a defined settlement where less than 3,000 people live.

If you’re finding it difficult to pay, you may be able to get hardship relief, although this is usually available only to businesses that are significant to the local community. Local councils can decide whether or not you are eligible for this relief to top up the discount from 50% to 100%.

What businesses are exempt from business rates?

  • Farm buildings and land (excluding building used as offices or for business activities)
  • Buildings used for training or welfare of disabled people
  • Fish farms
  • Places of public religious worship

Businesses that own empty property are exempt from empty property rates for the first three months that they are empty, while industrial or warehouse properties are exempt for the first six months. After these periods businesses that own empty property are liable to pay business rates in the normal way.

How to pay business rates

The council will normally send you a rates bill in March or April, and most councils will ask you to pay in equal monthly installments. Before this, you can also estimate your business rates bill using the government's online calculator.

Small Business Rates Relief is usually automatically applied. You can contact your local authority if you think your bill is incorrect. Likewise, if you are having cash flow problems and are finding it difficult to pay the bill, contact the local council because they may be able to help.

Changing address can sometimes also impact your business rates bill. Be sure to tell your local council if you start up a new business or if you move premises, so they can charge you the right amount.

Small Business Rates FAQs
  • Will business rates increase in 2023?
    On April 1 2023, new rateable values (the metric used to calculate a business rates bill) determined by the Valuation Office Agency (VOA) came into effect on all non-domestic properties in England and Wales. Likely this will mean an increase in costs for ratepayers, although some business rates may have also been lowered.
  • Who qualifies for Small Business Rate Relief (SBRR)?
    Small businesses in England will automatically qualify for SBRR of between 0-100% if your business property has a rateable value of less than £15,000. Rates relief is handled differently if your property is in Scotland, Wales or Northern Ireland.
  • Can I back date business rates relief?
    Your billing authority can only backdate any business rates rebate to the date from which any change to the list is to have effect. That means when the rateable values were updated on 1 April 2023, most businesses can now only backdate payments to that date. That said, there may be some cases when backdating to an earlier date is possible. It's always best to check with your local council.

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Written by:
Helena Young
Helena is Lead Writer at Startups. As resident people and premises expert, she's an authority on topics such as business energy, office and coworking spaces, and project management software. With a background in PR and marketing, Helena also manages the Startups 100 Index and is passionate about giving early-stage startups a platform to boost their brands. From interviewing Wetherspoon's boss Tim Martin to spotting data-led working from home trends, her insight has been featured by major trade publications including the ICAEW, and news outlets like the BBC, ITV News, Daily Express, and HuffPost UK.

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