When I first took on a commercial property in the UK, one of the terms that kept coming up was “business rates.”
At first, it felt like just another financial obligation on top of many others. But once I understood how it worked, I realised it’s actually a key part of local infrastructure funding.
So, what is business rates, and how does it affect people like me who own or rent non-domestic property?
Let me walk you through everything I’ve learned — from what business rates actually mean to how they’re calculated, and even how I discovered ways to reduce my bill.
Understanding Business Rates UK – What Does It Mean?
What Are Business Rates (Also Called Non-Domestic Rates)?
Business rates, or non-domestic rates, are a type of tax I pay to my local council if I occupy a commercial property — like a shop, office, pub, warehouse, or factory.
Unlike Council Tax, which is for residential homes, business rates apply to non-domestic properties.
The money collected helps fund local services, including education, waste collection, emergency services, and road maintenance — services that benefit both the business community and the public.
Why Do I Pay Business Rates?
From my perspective, it’s similar to how I pay Council Tax at home — except this supports the commercial infrastructure.
It’s my way of contributing to the upkeep of my business environment and the wider community I trade in.
Who Is Liable to Pay Them?
Generally, the occupier of the property is liable for the business rates. That means if I’m renting a shop, I’m the one responsible.
However, if a property is unoccupied, the owner might still have to pay unless it qualifies for an exemption.
Where Does This System Come From?
Business rates in England have a long history, but the modern system was shaped by the Local Government Finance Act 1988.
The system continues to evolve, especially with recent changes like the Non-Domestic Rating Act 2023.
How is Business Rates Calculation UK Done?
What is “Rateable Value”?
The rateable value is the starting point for any business rates bill. It’s essentially an estimate of what my property could rent for on the open market as of a specific date.
This value is assigned by the Valuation Office Agency (VOA) and reviewed periodically (usually every three years).
What is the Multiplier/Uniform Business Rate?
To work out my business rates, I take the rateable value and multiply it by something called the “multiplier” — which is set by the government annually.
There are usually two types of multipliers:
- Standard multiplier: For properties above a certain value.
- Small business multiplier: For those with lower rateable values.
Example Calculation Table
Here’s a simple example that helped me understand it better:
| Rateable Value (£) | Multiplier (pence in £) | Annual Business Rates Bill (£) |
| 20,000 | 0.50 | 10,000 |
| 7,500 | 0.50 | 3,750 |
Note: Multipliers change annually and differ in England, Wales, and Scotland.
What Affects the Calculation?
My business rates can change based on:
- Adjustments to the rateable value during revaluation
- Physical changes to my property (e.g., extensions)
- Location (some areas have local supplements or discounts)
- Reliefs I may qualify for
What Kinds of Properties & Situations Are Covered by Business Rates Relief?
Types of Relief & Exemptions
Fortunately, I found out that several relief schemes exist to reduce the bill. Here are some I explored:
- Small Business Rate Relief (SBRR) – If my property’s rateable value is under £15,000.
- Charity Relief – Available if I’m a registered charity or nonprofit.
- Rural Rate Relief – Applies to small businesses in rural areas.
- Empty Property Relief – A temporary exemption when a property is unoccupied.
How to Check if Your Property Qualifies?
To find out whether I was eligible for any relief, I contacted my local council and also used the business rates valuation tool on GOV.UK.
It’s straightforward and helps you compare your current rateable value and potential savings.
What to Watch Out For?
One thing I learned quickly: reliefs aren’t automatic. I had to apply for most of them and submit the proper documentation.
Also, moving into a new space or changing the use of a property can affect my eligibility.
Practical Table – “As I Manage My Business, Here’s How I Treat Business Rates in My Planning”
| Action | Why It Matters | What I Do |
| Check rateable value annually | To avoid overpayment | Use VOA’s site to verify every revaluation cycle |
| Explore eligibility for reliefs | Could lower my bill by thousands | Apply through my local council |
| Factor into my lease budgeting | It’s a fixed operational cost | Include it in cash flow projections |
| Review updates from GOV.UK | Laws and rates can change yearly | Subscribe to government updates and alerts |
What is the Future for Business Rates in England?
Recent Reforms & Upcoming Changes
In 2023, the Non-Domestic Rating Act introduced a few major changes, including more frequent valuations and incentives for energy-efficient upgrades. The government is also offering temporary relief for retail, hospitality, and leisure businesses post-pandemic.
Why It Matters to Me as a Business Occupier?
Changes to business rates in England directly affect how much I pay and whether I stay competitive. I’ve had to adjust my pricing, location strategy, and budgeting due to new rates and relief schemes.
Tips for Staying Ahead
- I check GOV.UK for updates every quarter.
- I subscribe to local business newsletters.
- I joined a local chamber of commerce to hear about changes early.
Conclusion
By now, I’ve answered my original question — what is business rates — and then some. I know how it’s calculated, who pays it, how to reduce it, and even how to challenge it if it seems unfair.
If you’re running or planning to run a business in the UK, don’t overlook this important aspect. Understand your rateable value, explore all possible business rates relief, and factor it into your financial planning.
Being proactive with business rates gives me one less thing to worry about — and more space to focus on growing my business.
Key Questions I Ask When Dealing with What is Business Rates
1. Can I Appeal My Rateable Value?
Yes, absolutely. If I think my rateable value is too high or based on incorrect details, I can appeal through the “Check, Challenge, Appeal” system on GOV.UK.
I did this once and was able to lower my rateable value, reducing my bill significantly.
2. What Happens If I Move or Expand My Premises?
When I moved to a larger shop, I noticed that my rateable value changed — and so did my liability. If I merge properties or expand, the VOA may reassess my entire premises.
3. How Do Business Rates Interact with My Other Taxes/Expenses?
While business rates are separate from other taxes like Corporation Tax or VAT, they still impact my cash flow. That’s why I include them in my annual financial planning.
4. What Are the Consequences of Not Paying?
If I ignore the bill, my local council has the legal right to recover the money. They can issue summonses, apply for liability orders, or use bailiffs. So I always make sure I keep up with my payments or speak to the council if there’s an issue.
Leave a Reply