What Are Business Rates?

Business rates are a local tax levied on the occupiers of non-domestic properties, such as businesses, in a similar way that council tax is levied on domestic properties. They are a significant cost for many businesses and contribute to the funding of local services.

How They’re Calculated

Business rates are based on a property's rateable value, which is an estimate of its annual rental value. A multiplier is then applied to the rateable value to determine the amount of tax due.

Reliefs and Exemptions

There are various forms of business rates relief available, such as small business relief, rural relief, and charitable relief.

Examples of Properties Subject to Business Rates

Shops, offices, pubs, warehouses, factories, and holiday rentals are all typically subject to business rates.

Business Rates Liability

Once the Rateable Value (RV) is established, you calculate your business rates bill by multiplying RV by the multiplier (set annually by the government):
Example:

RV = £38,000
Multiplier = 49.9p
Annual rates bill = £38,000 × 0.499 = £18,962

Who Pays Business Rates?

Apart from properties that are exempt from business rates, each non-domestic property has a rateable value which is set by the Valuation Office Agency (VOA), an agency of His Majesty's Revenue and Customs.

They compile and maintain a full list of all rateable values. The rateable value of your property is shown on the front of your bill.

This broadly represents the yearly rent the property could have been let for on the open market on a particular date specified in legislation.

For the current rating list, this date was set as 1 April 2024.

The Valuation Office Agency may alter the valuation if circumstances change. The ratepayer (and certain others who have an interest in the property) can also check and challenge the valuation shown in the list if they believe it is wrong.