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How to calculate your business rates

All you need to know about business rates payable, rateable value, multipliers, and whether your business is eligible for a COVID-19 business rates exemption

COVID-19 UPDATE:

All businesses operating in the retail, hospitality, and leisure sectors in the UK will not have to pay business rates for the 2020 to 2021 tax year.

This 12-month business rates holiday applies to shops, restaurants, cafes, bars, pubs, cinemas, live music venues, assembly or leisure properties (such as spas, sports clubs, or gyms), and hospitality properties (hotels, guest houses, caravan sites, and self-catering accommodation). Estate agents, bingo halls, and letting agencies have also been added to the list of business types that are exempt from this year’s business rates.

Nurseries are also exempt from paying business rates for the 2020 to 2020 tax year. 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.

Grant funding of £25,000 has been made available to retail, hospitality, and leisure businesses with property of a rateable value between £15,000 and £51,000, with funding of £10,000 announced for properties with a rateable value of below £15,000.

Small business grant funding of £10,000 has also been made available for all businesses in receipt of rural rate relief or small business rate relief.

What are business rates?

In a similar way that residents pay council tax, businesses pay business rates to local authorities, which help finance local services.

Do I need to pay business rates?

Business rates are charged on businesses that occupy non-domestic or commercial properties. The property occupier, either the owner or the leaseholder, pays the business rates.

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

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. You’re more likely to have to pay business rates if a room is exclusively used for business, or if it has been adapted for work purposes.

What is rateable value and what are multipliers?

  • 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.
  • A multiplier is 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.

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

It’s worth knowing how to calculate your business rates yourself to ensure you’re paying the right amount. It is also useful to know if you want to plan your financial year ahead in a new property that you don’t yet know the business rates of or, if you want to know the business rates for a property you’re thinking of moving your business into.

How to calculate business rates:

  1. Search for your property's rateable value by postcode using this search option
  2. Find the correct ‘multiplier’ for the size of your business and location here
  3. Now multiply your rateable value by the correct ‘multiplier’

Current business rates multiplier values:

Year Standard business rates multiplier Small business rates multiplier Small business rates threshold
2019 to 2020 50.4p 49.1p £51,000
2018 to 2019 49.3p 48.0p £51,000
2017 to 2018 47.9p 48.4p £51,000
2016 to 2017 49.7p 48.4p £18,000 (£25,500 in Greater London)

Business rates are handled differently in Scotland, Wales, Northern Ireland and City of London; take a look at:

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.

Make sure you tell your local council if you start up a new business or if you move premises, so they can charge you the right amount.

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 change the amounts and dates of your payments to make things easier for your business.

Business rates calculation example

In England the standard multiplier for 2019-2020 is 50.4p and the small business multiplier (for properties with a rateable value of under £51,000) is 49.1p. Say you are looking to move into a property that has a rateable value of £10,000, to calculate your business rates you would multiply the ‘multiplier’ by the rateable value – 49.1p x £10,000 = £4,910. So the estimated business rates for your property would be £4,910.

But do I really need to pay business rates?

There are certain buildings that are exempt from business rates. These are:

  • 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.

To find out more about whether you qualify for any other business rates reliefs, visit our small business rates relief guide.

Businesses operating in the retail, hospitality, and leisure industries, as well as some nurseries, are exempt from business rates for the 2020 to 2021 tax year. For more information about whether your business is eligible, head back up to the top of the page, or click through to the government's website.

Henry Williams
Henry Williams

Henry has been writing for Startups.co.uk since 2015, covering everything from business finance and web builders to tax and red tape. He’s also contributed to many of our industry-renowned annual indexes, including Startups 100 and Young Guns, and created a number of the site’s popular how to guides. Before joining the team, he reviewed films for a culture website, and still harbours ambitions of being a screenwriter.

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  1. Hello, In the first year of starting a new business am I liable to start paying business rates straight away as trying to workout my cashflow for first year .

  2. Thanks for this great page on business rates. I’ve never needed to look at paying business rates before so this was a really useful introduction.