Business Rates Explained – What Every UK Business Should Know

If you own a shop, an office, or any commercial space in the UK, you’ve probably heard the term “business rates”. It’s a tax on the property you use for work, not on the profits you make. Sounds simple, but the details can get confusing fast. This guide breaks down the basics, shows you how the bill is worked out, and gives practical tips to keep the cost down.

How Business Rates Are Calculated

The calculation starts with the rateable value. This is the estimated annual rent the property would fetch on the open market, set by the Valuation Office Agency (VOA). The VOA reviews each property every few years, so the number can change.

Once you have the rateable value, the government applies a multiplier. There are two multipliers – a standard one for most properties and a lower one for small or charitable premises. For the 2024‑25 tax year the standard multiplier is 51.2p and the small‑business multiplier is 49.9p. Multiply the rateable value by the appropriate multiplier and you get the yearly business rates bill.

Example: A shop with a rateable value of £20,000 and the standard multiplier would pay £20,000 × 0.512 = £10,240 per year.

Payments are usually due in monthly installments, and you’ll get a bill from your local council. If the rateable value seems too high, you can challenge it within 28 days of the notice. The VOA will then reassess the property – it’s worth a try if you think the market rent is lower.

Ways to Reduce Your Business Rates

Fortunately, the system includes several reliefs designed to help small businesses and charities. The biggest is Small Business Rate Relief (SBRR). If your rateable value is £15,000 or less, you could get up to 100% relief. Even if the value is between £15,001 and £20,000, you still get a sliding scale of relief.

Charities, community amateur sports clubs, and some non‑profits can claim Charitable Rate Relief. This usually means paying only the lower multiplier, which can cut the bill by several hundred pounds.

Another handy option is the Rural Rate Relief. If your property is in a designated rural area, you may qualify for an additional discount. Check with your council’s website for the exact criteria.

Beyond official reliefs, look for practical steps to lower the rateable value. If you’ve made major changes to the layout, added or removed floors, or changed the use of the space, request a revaluation. Even a small tweak in how the space is used can shift the rateable value enough to save money.

Using a business rates calculator online can give you a quick estimate of what you’ll owe, and many calculators also show how different reliefs affect the total. Plug in your property’s details, try the relief options, and you’ll see immediately where the biggest savings lie.

Lastly, keep records of all correspondence with your council and the VOA. If you’re ever unsure about a charge, having the paperwork handy makes it easier to resolve disputes quickly.

Business rates are a mandatory cost, but they don’t have to be a mystery. By understanding how the bill is formed, checking for reliefs, and challenging any errors, you can keep the expense as low as possible. Stay on top of revaluations, use online tools, and don’t be afraid to ask questions – that’s the best way to make sure you’re only paying what you should.