What are business rates? Calculator and Small Business Rate Relief explained

Business rates are a type of tax charged to businesses occupying non-domestic or commercial properties, such as offices, shops, or warehouses.

Business rates are charged by local authorities to finance public services, similar to how you pay council tax. They can represent a significant fixed cost for businesses, making understanding which rates your business is subject to, and what reliefs you’re eligible for, important.

In this article, we’ll guide you through everything you need to know about business rates, including the latest rates, how to calculate them, how to pay them, and any relief or exemption you may be entitled to.

What are business rates?

Business rates are a tax levied on most non-domestic properties collected by local authorities to help fund public services in the area. The amount of tax each business pays is based on the property’s “rateable value”, which is an estimate of its annual rental value.  

Non-domestic or commercial properties include businesses like shops, offices, bars, warehouses, and rental properties. Even if you only use part of a building for non-domestic purposes (for example, a shop with a residential flat above it), you’ll still need to pay business rates on the area that’s used for business. 

Glossary of business rate terms

Don’t know your ratable value from your revaluation? To help you demystify the jargon, here are some important business rate terms explained. 

• Multiplier – 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.
• Rateable value – The estimated value given to a premises, based on its probable annual market rent. These values are reviewed every three years, and take the size of the property and its usage into consideration.
• VOA (Valuation Office Agency) – The governmental body whose role is to assess and set the rateable value for all non-domestic or commercial properties in England and Wales.

How to calculate business rates

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

Here is the equation you should follow: 

Rateable Value (in £) x Multiplier (in £/£) = Your annual business rates bill (before any reliefs)

Rateable values are set by the VOA and are regularly revalued to reflect changes in the property market, whereas multipliers are set by the central government and are annually reviewed.

You can also determine your business rates bill using the government’s online calculator.

As of April 2025, the standard multiplier in England has seen a slight increase of 54.6p to 55.5p for properties with a rateable value of over £51,000. Yet, as part of a government support package for small businesses and small to medium enterprises (SMEs), business rates multipliers for these businesses remain frozen at 49.9p for the 2025–2026 financial year.

However, it is important to note that these figures are based on English business rates. We explore further down the article how they can differ from region to region. 

Current business rates multiplier values

*Updated June 2025

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. To do this, simply:

• Search for a property’s rateable value by postcode
• Find the correct multiplier for the size of your business and location
• Multiply your rateble value by the correct multiplier

Example calculation

Here’s a quick example to see how the calculation works in practice:

Jaya has a business in East Anglia. The rateable value of her business is £8,000. She should use the 2025–2026 small business multiplier (49.9p) to estimate her business rates as follows:

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

As Jaya’s rateable value is between £6,001 and £12,000 she’ll be eligible for small business rate relief (SBRR) on a tapered basis from 100% to zero.

Small Business Rates Relief (SBRR)

Small business rate relief (SBBR) is a national discount scheme administered by local councils on behalf of the UK government.

In England, you can get SBRR if your property has a rateable value of £15,000 or less. SBBR is handled differently if your property is in Scotland, Wales or Northern Ireland.

The cost of living crisis has put significant cost pressures on startups and small businesses. As of April 2025, inflation in the UK was reported to be at 3.5%. The SBRR scheme was designed to mitigate some of this impact on small, single-property businesses.

How is SBRR calculated?

SBRR is awarded on a sliding scale, depending on the size of your Rateable Value (RV).

What if I own multiple properties?

This relief typically applies to businesses occupying a single property. However, if you run a business with more than one property, such as a cafe, retail store, or restaurant with multiple locations, or car cleaning or gardening business with mobile locations, you can get SBRR as long as:

• None of your other properties has a rateable value of over £2,899
• The combined rateable value of all your properties is less than £20,000 (or £28,000 if they’re in London)

From there, the rateable values of the properties are added together, and relief is applied to the main property. You can find out if you qualify for SBRR by contacting your local council.

What if I don’t qualify for SBRR?

In England, even if you don’t 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 as opposed to 51.2p).

For example, if you run a cafe in England with a rateable value of £30,000, you won’t be eligible for the SBRR, but your local council will automatically apply the Small Business Multiplier, instead of the Standard Multiplier, to calculate your bill. Therefore, your business rates bill would be £14,960 instead of £15,650, saving you a total of £690.

Can SBRR be backdated?

Yes, SBRR can sometimes be backdated, but strict limits apply. Most councils in the UK typically allow backdated claims up to six years from April 1st of the current year.

To qualify, your business must have met all SBRR eligibility criteria for the period for which you’re claiming, including having a rateable value within the SBRR threshold during that time. You’ll also need to provide evidence proving that you met the eligibility criteria, such as proof of occupancy and rateable value.

Retail, Hospitality, and Leisure Relief

You can also receive relief if you run a hospitality, retail, or leisure business, thanks to the Retail, Hospitality, and Leisure Relief (RHLR) Scheme. The RHLR is a business rates discount rolled out by the UK government to support businesses within these sectors.

The scheme gives all eligible firms 40% off their business rates bills – capped at £110,000 per business. This percentage recently decreased from 70% following the government’s latest 2024 Autumn Budget.

As an example, a high street shop has a rateable value of £21,500 and a basic bill of £10,728. Thanks to RHL relief, it receives a discount of £4.291.40 (£10,728 x 0.40), bringing the final bill down to £6,437.10.

If a car wash occupied more than one property, it would be entitled to relief for each of its eligible properties, up to a total value of £110,000.

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.

Changes to RHLR in 2026

The current temporary RHLR scheme is due to come to an end entirely in April 2026.

This doesn’t mean that the government will stop supporting retail, hospitality, and leisure businesses with their rates. Instead, a new permanent system is planned to be introduced, with the ambition of revitalising the high street by reforming business rates.

However, with the House of Lords recently voting to block a part of the plan for not being fully considered, the government’s plans to overhaul the system are currently looking unlikely.

What other business rate reliefs are there?

Business rate relief schemes provide support to businesses by reducing or eliminating their business rates under specific circumstances. These are designed to ease the burden and help sustain your business.

Enterprise Zone relief

• You must be located within a designated enterprise zone
• You must be a newly occupied property, or one that has recently relocated to an eligible zone

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 up to 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

• You must be a charity, or the trustees of a charity
• Or, a community or amateur sports club (CASC)

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

Rural rate relief

• You must be the only village general store, food stop, or post office with a rateable value of up to £8,500
• Or, the only public house or petrol station, with a rateable value of up to £12,500

Businesses based in rural areas won’t have to pay business rates if they’re eligible for rural rate relief.

To qualify for rural rate relief, your business must be located in a designated area of rural settlement listed in the rural settlement register, with a population of fewer than 3,000 residents.

Hardship relief

• You must have financial difficulties without it
• It must be in the best interests of local people

If your business is eligible for hardship relief, your local council can reduce or scrap your business rates. To get this relief, the council must agree that your business will be in financial difficulties without it, and that relief would be in the interest of your local community.

However, you may be asked for proof of your financial situation or how your business benefits the community.

Low-carbon heat network relief

• You must take your energy from a low-carbon source
• You must supply heating and cooling to other properties in your area

For properties that are wholly or mainly used as a heat network, and that meet specific low-carbon criteria, the low-carbon heat network relief provides a 100% exemption for business rates. The aim of the relief is to lower operational costs for these properties, to help the UK reach its net-zero targets.

You can find out more about additional relief schemes on the government website.

Regional differences in business rates

While the core concept of business rates is similar across all four UK nations, the specific rules, relief schemes, and multipliers can vary between countries.

Being aware of these differences is important in order to manage your rates effectively and make the best savings possible.

How are business rates calculated in England?

In England, the standard multiplier is set at 55.5p, and the small business multiplier is frozen at 49.9p. The appeal structure follows the “Check, Challenge, Appeal” process via the VOA online portal, which we explain later on in the article. The key relief schemes in England are as follows:

• Small Business Rate Relief (SBRR)
• Retail, Hospitality, and Leisure (RHL) Relief
• Rural Rate Relief
• Charitable Rate Relief
• Enterprise Zone Relief
• Low-Carbon Heat Network Relief

Learn more about the English GOV.UK Business Rates here.

How are business rates calculated in Wales?

Wales’s rate multipliers align with England’s, with the standard multiplier being 55.5p, and the small business multiplier 49.9p. Businesses can also appeal their valuation in a similar way, using the “Check, Challenge, Appeal” process. Key relief schemes include:

• Small Business Rate Relief (SBRR)
• Retail, Hospitality, and Leisure (RHL) Relief
• Council-related reliefs
• New development reliefs

Check out the Welsh government’s Business Rates guide for more information.

How are business rates calculated in Scotland?

Scotland’s multiplier rates operate slightly differently.

The country uses a tiered system. The Basic Property Rate (up to £51,000 RV) is 49.8p, the Intermediate Property Rate (£51,001 to £100,000 RV) is 55.4p, and the Higher Property Rate (over £100,000 RV) is 56.8p.

Scotland’s appeal structure is set by independent assessors in Scotland, and appeals are then made to the local Valuation Appeal Committee.

Its business rates relief schemes differ from those in England, too. The main relief options available are:

• Small Business Bonus Scheme (SBBS)
• Business Growth Accelerator
• Transitional Reliefs
• New Heat Networks Relief

Visit mygov.scot for guidance on Paying non-domestic rates for more information about business rates in Scotland.

How are business rates calculated in Northern Ireland?

Multiplier rates in Northern Ireland are made up of both regional and district rates, set by each of the 11 local district councils.

The regional rate for non-domestic properties has been set at 29.89 pence in the pound, and the district rate will vary based on which council area a property is located in. Therefore, the business rate for non-domestic property will be 29.89p plus the rate in their district council.

Valuations in the region are orchestrated by the Land & Property Services (LPS), and the appeal process is managed by the Commissioner of Valuation for Northern Ireland.

Key relief schemes in Northern Ireland include:

• Small Business Rate Relief Scheme (SBRR)
• Back in Business Scheme
• Industrial Re-rating
• Rural ATM Exemption

To learn more about business rates in Northern Ireland, check out this guide by nibusinessinfo.

What businesses are exempt from business rates?

Certain businesses do not have to pay business rates. These include:

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

Businesses that own an empty property are exempt from business rates for the first three months that it’s unoccupied, while industrial and warehouse buildings are exempt for the first six months. Once these periods are over, businesses will have to pay business rates as normal.

How to avoid paying business rates

While most non-domestic properties are liable for business rates, serviced offices and coworking spaces don’t need to pay business rates directly. This is because the rates for the building are usually included in part of your membership fee or rental agreement.

Due to their low business rates compared to traditional office leases, many SME’s have started searching for coworking spaces as a practical way to decrease overheads.

If you’re considering switching out your office space for a communal solution, we’ve rounded up some cheap coworking spaces in London that won’t break the bank.

How to pay your business rates

Paying your rates is a crucial responsibility for businesses occupying commercial properties. Here’s how the process works, from when bills arrive to the final payments.

When bills arrive

Your local council will normally send you your business rates bill in March and April. This bill will cover the upcoming financial year, giving you time to review the bill and prepare for the payments.

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

How to pay

Most local councils offer a variety of ways to pay your business rates, with payments typically spread over 10 monthly instalments from April to January. Many councils give you the option to pay over 12 monthly instalments, from April to March, to help ease cash flow burdens.

You’ll be able to make these payments via direct debit, online payment portals, telephone payments, or by post, depending on your preference.

What to do if you’re struggling

If you’re having cash flow problems and finding it difficult to pay the bill, make sure you contact your local council for help. Don’t wait until you’ve missed a payment, as this could result in reminder letters, a summons to court, and potential financial penalties.

How to appeal your business rates valuation

If you think your business rates valuation is incorrect, there are steps you can take to try and challenge it.

1. Sign in to your GOV.UK business rates valuation account, or set one up if you haven’t already. To do this, you’ll need a Government Gateway ID.
2. Add your property to your account, and provide evidence of your connection to it, e.g. by submitting evidence of paying bills.
3. Submit a ‘Check’ case, where you confirm your property details are correct. You can also report factual errors with your property at this stage.
4. Submit a ‘Challenge’ case if you still disagree with the RV after the Check stage. Here, you must clearly state why you think the valuation is wrong and provide evidence such as property details, lease details, or trading information. You should also state what you think the correct RV should be.

If you disagree with the VOA’s decision on your challenge, you can also appeal to the independent Valuation Tribunal for England (VTE). However, you will typically have to pay a fee at this stage.

What’s next?

Now you’re up to speed on business rates, here’s a round-up of the actions you should take to manage them effectively: 

• Find your rateable value
• Calculate your estimated bill
• Check relief eligibility
• Contact your local council
• Appeal if necessary

Want to avoid paying business rates? Find out more about how to find cheap coworking spaces in 2025.