What are business rates?
Business rates (also called non-domestic rates) are a tax on commercial property in England, Scotland and Wales. They are paid by the occupier of a commercial property — not the owner — and are calculated by multiplying the property's rateable value by a government-set multiplier. The government collects over £25 billion annually in business rates, making them one of the largest taxes on commercial enterprises.
Business rates affect millions of UK businesses — from small corner shops and professional offices to large warehouses and hotel chains. They are mandatory for any occupied commercial property and are usually billed annually by your local council in 10 monthly instalments. Many businesses don't realise they may be paying too much, either because their rateable value is set incorrectly or because they are not claiming reliefs they're entitled to. This guide explains how business rates work so you can understand your bill and identify if you're overpaying.
How are business rates calculated?
The formula for calculating your annual business rates bill is straightforward: Rateable Value × Multiplier = Annual Bill. However, both the rateable value and the multiplier are set by the government, so you have limited direct control over the amount — unless your rateable value is wrong, which you can challenge.
Here's a worked example. Suppose your property has a rateable value of £40,000 and you pay the standard multiplier. For 2026/27, the standard multiplier is 48.0p (£0.480). Your annual bill would be: £40,000 × 0.480 = £19,200 per year. If your property qualified for the lower small business multiplier (43.2p), the same property would cost £40,000 × 0.432 = £17,280 per year — a saving of £1,920 annually just by using the lower multiplier.
The 2026/27 multipliers by property size and type are:
| Multiplier Category | Rate for 2026/27 | Applies To |
|---|---|---|
| Small business multiplier | 43.2p (£0.432) | Properties with RV below £51,000 |
| Standard multiplier | 48.0p (£0.480) | Properties with RV £51,000 to £499,999 |
| RHL small multiplier | 38.2p (£0.382) | Retail, hospitality & leisure with RV below £51,000 |
| RHL standard multiplier | 43.0p (£0.430) | Retail, hospitality & leisure with RV £51,000+ |
| High-value multiplier | 50.8p (£0.508) | Properties with RV £500,000 and above |
These multipliers came into effect on 1 April 2026 as part of the annual business rates revaluation. The multipliers are adjusted each year to account for inflation and changes in property values. The rateable value, by contrast, is set for a five-year period (next revaluation in 2031).
How is rateable value set?
Your rateable value is set by the Valuation Office Agency (VOA), a government body responsible for assessing the estimated annual rental value of every commercial property in England, Wales and Scotland. The VOA does not assess the actual rent you pay; instead, they estimate what the property would be worth to rent on the open market at a set date known as the Antecedent Valuation Date (AVD).
For the 2026 revaluation (in effect from 1 April 2026), the Antecedent Valuation Date was set at 1 April 2024. This means the VOA estimated the rental value of your property as at April 2024, even though the new rateable value only took effect in April 2026. The rateable value remains fixed for five years unless there is a material change in circumstances (such as an extension, significant damage, or a change of use).
To find your rateable value, visit gov.uk/find-business-rates and enter your property address. Your rateable value also appears on your business rates bill from your local council. If you believe your rateable value is incorrect — because it does not reflect comparable properties in your area, or because there have been material changes to your property — you have the right to challenge it through the Check, Challenge, Appeal (CCA) process. A successful challenge can reduce your bill significantly.
Who pays business rates?
The occupier of a commercial property pays business rates, not the owner. This is a crucial distinction. If you lease a commercial property, you (the occupier) are liable for business rates even if you don't own the building. If you own a property and lease it to others, you do not pay business rates on it — your tenants do.
Business rates apply to almost all commercial properties, including offices, retail shops, restaurants and cafes, pubs and bars, hotels and guest houses, warehouses and industrial buildings, care homes and nursing homes, medical surgeries and dental practices, garages and petrol stations, and leisure facilities such as gyms and swimming pools. Empty property is handled separately: if a property has been empty for up to three months, no business rates are charged. After three months (six months for industrial properties), full rates become due unless another relief or exemption applies.
Some properties are exempt from business rates altogether. Agricultural land and buildings used for agricultural purposes are not liable. Places of worship (churches, mosques, synagogues, temples) are exempt. Charities using properties for charitable purposes can claim mandatory relief. Some community buildings and spaces used for public benefit may also be exempt. Properties used by government bodies and some public services also have exemptions. If you believe your property should be exempt, contact your local council's business rates team for assessment.
Business rates reliefs — reducing your bill
The government offers several reliefs designed to reduce or eliminate business rates bills for eligible businesses. Many businesses are unaware they qualify for reliefs and continue to pay the full amount.
| Relief Type | Discount | Who Qualifies |
|---|---|---|
| Small Business Rate Relief (SBRR) | Up to 100% | Properties with RV up to £15,000 (100% if RV ≤ £12,000) |
| Retail, Hospitality & Leisure (RHL) relief | 50% (capped at £110,000 per year) | Shops, restaurants, pubs, hotels, cinemas, gyms, etc. |
| Transitional relief | Variable | Properties whose bills increased significantly after revaluation |
| Charity relief | Up to 100% | Charities and properties used for charitable purposes |
| Empty property relief | 100% | First 3 months of vacancy (industrial: 6 months) |
The most valuable relief is Small Business Rate Relief (SBRR), which can eliminate a business rates bill entirely for properties with a rateable value of £12,000 or less. Many councils apply SBRR automatically, but if you're paying full rates and believe you should qualify, contact your local council's business rates team immediately. Retail, Hospitality and Leisure (RHL) relief provides 50% discount (capped at £110,000 per year) for eligible hospitality, retail and leisure businesses — and this applies even if you don't qualify for SBRR. Transitional relief has been in place following recent revaluations to cap year-on-year increases in bills. Charities can claim mandatory relief of 80% and may be eligible for discretionary relief of a further 20%. Check with your local council about all reliefs you might qualify for.
When and how do you pay business rates?
Your local council sends you a business rates bill each financial year (April to March). The bill shows your rateable value, the multiplier, your calculated annual bill, and any reliefs applied. Business rates are normally collected in 10 monthly instalments from April to January. You can request 12 monthly instalments instead — contact your council's business rates team to arrange this.
Payment is usually made by direct debit, but you can also pay online, by cheque, by phone, or in person at a council office. If you do not pay on time, the council can issue a reminder notice. Continuing non-payment can result in legal action and enforcement. If you believe your bill is incorrect or you should qualify for a relief, contact your council immediately — do not simply ignore the bill.
Could you be overpaying?
Many businesses are overpaying their business rates without realising it. Your rateable value may have been set too high, either from the outset or following the most recent revaluation. Even small overvaluations compound year after year. For example, if your rateable value is overvalued by just £2,000, that could cost you £960 per year (at the 48.0p multiplier) — £4,800 over five years.
The April 2026 revaluation changed rateable values across England and Wales, with some properties increasing significantly and others decreasing. If your rateable value increased and your bill has risen steeply, you may have grounds to challenge the new value. You also may not be claiming reliefs you're entitled to — particularly Small Business Rate Relief or Retail, Hospitality and Leisure relief — which could cut your bill by 50% or more.
The Check, Challenge, Appeal (CCA) process lets you challenge your rateable value: Check your rateable value online at gov.uk/find-business-rates. Challenge it if you believe it's wrong, with supporting evidence of comparable properties. Appeal to an independent tribunal if the VOA rejects your challenge. This process is free and conducted through a regulated specialist who typically works on a no win, no fee basis — meaning you pay only if they successfully reduce your rateable value. A successful challenge can save you thousands of pounds.
Frequently asked questions
What are business rates?
Business rates (also called non-domestic rates) are a tax on commercial property in England, Scotland and Wales. They are paid by the occupier of a commercial property — not the owner — and are calculated by multiplying the property's rateable value by a government-set multiplier. Over £25 billion in business rates are collected annually in the UK.
Who is responsible for paying business rates?
The occupier of a commercial property pays business rates, not the landlord. This applies to offices, shops, restaurants, warehouses, hotels, care homes, surgeries, and other commercial buildings. You must pay business rates if you occupy a non-domestic property, regardless of whether you own it or lease it.
How do I find my rateable value?
Your rateable value is shown on your business rates bill from your local council. You can also look it up online at gov.uk/find-business-rates by entering your property address. The Valuation Office Agency (VOA) is responsible for setting and maintaining all rateable values across England, Wales and Scotland.
What is the business rates multiplier for 2026/27?
For 2026/27, the multipliers are: small business multiplier 43.2p (for properties with rateable value below £51,000), standard multiplier 48.0p (for properties £51,000 and above), retail, hospitality and leisure (RHL) small 38.2p, RHL standard 43.0p, and high-value (£500,000 and above) 50.8p. These replaced the previous multipliers as part of the April 2026 revaluation.
Are there any exemptions from business rates?
Yes. Agricultural land and buildings used for agriculture are exempt. Places of worship are exempt. Charities using properties for charitable purposes can claim mandatory relief. Some community buildings also receive exemption. However, most commercial properties (offices, shops, restaurants, warehouses, hotels, care homes) are liable.
What is the 2026 business rates revaluation?
Business rates revaluations happen every 5 years. The 2026 revaluation came into effect on 1 April 2026, with rateable values based on estimated annual rents at 1 April 2024 (the Antecedent Valuation Date). Many properties saw significant changes to their rateable values, which affects the annual bill. If your new value is incorrect, you can challenge it through the Check, Challenge, Appeal (CCA) process.
Can I reduce my business rates bill?
Yes. Many businesses qualify for reliefs that reduce or eliminate bills: Small Business Rate Relief (up to 100%), Retail, Hospitality and Leisure relief, transitional relief, charity relief, and empty property relief. Additionally, if your rateable value has been set too high, you can challenge it through the Check, Challenge, Appeal (CCA) process at no upfront cost.