UK business rates: what small businesses pay and how to reduce the bill

Published Wednesday 19 August 2026

Table of contents

• What are business rates and who pays?
• How are business rates calculated?
• How do you check your rateable value?
• What reliefs and exemptions can you claim?
• How can you reduce your business rates bill?
• How and when do you pay business rates?
• What changed with business rates from 2026?
• Plan your business rates alongside other costs
• FAQs on business rates

Key takeaways

• Business rates are a property tax on non-domestic properties, calculated using your rateable value multiplied by a government-set multiplier that changes annually.
• You can reduce costs significantly through small business rate relief, retail, hospitality and leisure relief, and other business rates relief UK schemes if you meet the eligibility criteria.
• Check your rateable value using the Valuation Office Agency service and challenge any errors with supporting evidence like floor plans and comparable properties to ensure you're not overpaying.
• Significant changes took effect from April 2026, including a restructured multiplier system and updated retail, hospitality and leisure relief, so review your bill to make sure you’re on the right rate.

What are business rates and who pays?

Business rates are a tax on properties used for business purposes in the UK – think of them as the commercial equivalent of council tax, charged by your local council and based on the value of your property. They apply to anyone occupying a non-domestic property, like a shop, office, warehouse, or workshop.

You're responsible for paying if you're the occupier of a non-domestic property, whether you own or rent it. The following property types are typically liable:

• Retail premises like shops, cafes, and restaurants
• Offices and workspaces
• Warehouses and industrial units
• Leisure facilities and hotels
• Pubs and entertainment venues

Home-based businesses can also be liable if you've made significant changes to your property for business use, or if you use part of your home exclusively for business. A spare bedroom used as an office occasionally won't trigger business rates, but converting a garage into a commercial workshop might. Check with your local council if you're unsure about your specific situation.

Many small businesses qualify for relief that reduces or eliminates their bill entirely. The reliefs section below covers exactly how to claim these.

Who doesn't need to pay business rates?

Some properties are exempt from business rates entirely, meaning no bill is issued and no application is needed. Others qualify for full relief, which has the same practical effect but requires you to apply.

Exempt properties include:

• Agricultural land and buildings: Farmland and most agricultural buildings, including livestock buildings and barns, are exempt from business rates.
• Fish farms: Properties used for fish farming are generally exempt.
• Places of religious worship: Churches, chapels, mosques, temples, and similar buildings used for public religious worship are exempt.
• Properties used for the disabled: Buildings used wholly for the welfare of disabled people may qualify for exemption.

If your property is not exempt but has a rateable value of £12,000 or less in England, you pay nothing through small business rate relief. Properties with a rateable value from £12,001 to £15,000 may qualify for tapering relief. Check your rateable value and apply through your local council.

How are business rates calculated?

Your business rates bill comes down to a simple formula: rateable value × multiplier. The rateable value is what the Valuation Office Agency (VOA) estimates your property could rent for on the open market. The multiplier is a rate set by government that can change each tax year.

Here's how to calculate business rates UK in four steps:

1. Find your rateable value using your nation's official valuation service

You'll need your property's postcode and address. In England and Wales, use the GOV.UK Find a business rates valuation service. Scotland uses the Scottish Assessors Association search, and Northern Ireland has Land & Property Services.

The rateable value reflects what your property would rent for, based on rental evidence from a set valuation date – this is reassessed every three years. It's worth checking this figure carefully, as even a small error in the recorded floor area or property description can affect your bill significantly.

2. Identify the current multiplier for your nation and property size

As of April 2026, England has five multipliers, while Scotland and Wales each have three, with rates depending on property type and rateable value. Northern Ireland operates differently, combining regional rates with district rates set by each local council.

3. Multiply rateable value by the multiplier to get the gross bill

This gives you the starting point for your business rates bill. For example, if your rateable value is £15,000 and the small business multiplier is 49.9p, your gross bill would be £15,000 × 0.499 = £7,485 per year. This is your bill before any reliefs or exemptions are applied.

4. Apply any reliefs and exemptions to get the net bill

Councils automatically apply some reliefs, while others require you to apply. Your actual bill may be significantly lower than the gross amount once reliefs are factored in, so always check with your local council to confirm which reliefs have been applied to your account.

Business rates multipliers for retail, hospitality and leisure

The retail, hospitality and leisure (RHL) multiplier is a lower rate applied to eligible properties in these sectors instead of the standard multiplier. From April 2026, the government introduced a permanently lower multiplier for qualifying RHL properties, replacing the temporary relief scheme that has been in place since 2020.

From April 2026, the structure changed to the following rates.

• Small business RHL multiplier (2026/27): 38.2p for qualifying retail, hospitality and leisure properties with a rateable value below £51,000
• Small business non-RHL multiplier (2026/27): 43.2p for non-RHL properties with a rateable value below £51,000
• Standard RHL multiplier (2026/27): 43.0p for qualifying RHL properties with a rateable value between £51,000 and £499,999
• Standard non-RHL multiplier (2026/27): 48.0p for non-RHL properties with a rateable value between £51,000 and £499,999
• Large property multiplier (2026/27): 50.8p for all properties with a rateable value of £500,000 or above

Check GOV.UK or your local council's website to confirm which multiplier applies to your property.

How do you check your rateable value?

Your rateable value is the foundation of your business rates bill, so it's worth checking if it's accurate. The Valuation Office Agency or equivalent body in your nation sets this value based on what your property could rent for on the open market at a specific date.

To look up your rateable value, use the relevant service for your nation:

• England and Wales: Use the GOV.UK Find a business rates valuation service. You'll need your property address or postcode.
• Scotland: Search the Scottish Assessors Association portal for your property details.
• Northern Ireland: Use the Land & Property Services valuation search to find your property's rating.

The rateable value matters because even a small error can cost you hundreds or thousands of pounds over time. Check that the property description, floor area, and business use match your actual premises.

What to do if your details look wrong

If the valuation seems too high or the property details are incorrect, you can challenge it. Gather evidence first to support your case before starting the formal process:

• Compare the property description, floor area, and how the property is used against your actual records.
• Gather evidence like floor plans, measurements, photos, rent or lease details, and details of comparable properties in your area.
• Start the formal check or challenge process through the Check, Challenge, Appeal service in England and Wales, or the equivalent process in Scotland or Northern Ireland.
• Follow the official guidance on what evidence to submit and the deadlines you need to meet.

Challenging your rateable value can reduce your bill significantly if you have strong evidence. Many businesses successfully reduce their valuations by correcting factual errors or demonstrating that the assessment doesn't reflect reality.

What reliefs and exemptions can you claim?

Business rates relief schemes in the UK can dramatically reduce your bill, sometimes to zero. The key is understanding which reliefs you qualify for and making sure you claim them. Check which reliefs your council applies automatically and which ones you need to apply for.

Common reliefs include:

• Small business rate relief: Available if your property has a rateable value below a certain threshold, currently £15,000 in England, with 100% relief for properties with a rateable value of £12,000 or less, and tapering relief from £12,001 up to £15,000. To qualify, you must occupy only one property – or, if you have additional properties, each must have a rateable value below £2,900 and your total rateable value across all properties must not exceed £28,000. . Businesses who expand into multiple properties retain relief on their first property for three years after taking on a second, up from one year previously.
• RHL relief: Shops, restaurants, cafes, pubs, hotels, and leisure businesses may qualify for relief on properties used for these purposes. Check current rates and thresholds, as these schemes are often time-limited and subject to government budget announcements.
• Rural rate relief: Eligible if you're the only business of a qualifying type (including general store, post office, pub, or petrol station) in a rural settlement with a population below 3,000. You can receive 100% relief if you meet the criteria. Local councils can also grant discretionary relief to other rural businesses.
• Charity and community amateur sports club relief: Registered charities and community amateur sports clubs (CASCs) receive mandatory 80% relief, with discretionary relief on the remaining 20% available from councils.
• Empty property relief: Properties left empty may qualify for relief for a limited period, usually 3 or 6 months depending on the property type. After that, you'll pay full rates unless the property is exempt.
• Transitional or improvement relief: Improvement relief protects businesses from higher bills after revaluation or property improvements, and currently lasts 12 months from when the improvements are complete. To soften the blow of increased property valuations, transitional relief caps how much rates can rise – for example, in 2026/27, properties with a rateable value up to £20,000 had rates capped at 5%.

How can you reduce your business rates bill?

Here are practical, compliant ways to cut costs and avoid overpaying.

• Claim all eligible reliefs. Make sure you claim all the reliefs you qualify for. Apply for small business rate relief, RHL relief, and any other schemes relevant to your business activity. Check annually, as thresholds and schemes change.
• Check your valuation. Correct factual errors like incorrect floor area, property description, or business use. If your valuation seems too high, gather strong evidence such as comparable properties, rental data, and photos, then submit a formal challenge.
• Plan timing for moves or refurbishments. Understand how changes to your property or empty periods affect liability. Moving premises or making improvements can trigger revaluations, so plan these changes with business rates implications in mind.

When to get expert help

Some business rates cases are complex and benefit from professional support. Consider speaking to a qualified rating surveyor or reputable business rates companies if:

• Your rateable value is high and a successful challenge could save significant money
• You're unsure whether your property is correctly classified or measured
• You've already tried to challenge your valuation and been unsuccessful
• If you do appoint someone, check for RICS membership, relevant experience with similar properties, and get fee terms in writing before you commit.

How and when do you pay business rates?

Councils bill business rates annually, but you'll typically pay in monthly instalments across 10 months, April to January in England and Wales. Your council will send a bill in March or April for the year ahead, showing the total amount and the instalment schedule.

Most councils offer Direct Debit, which automates payments and reduces the risk of missing a deadline. If you're struggling to pay, contact your council early – they may be able to arrange a payment plan or provide advice on reliefs you haven't claimed.

What changed with business rates from 2026?

From April 2026, the business rates system in England changed significantly. The government is replacing the current temporary relief schemes with a permanently restructured multiplier system, affecting how most commercial properties are billed.

The main changes that took affect on 1 April 2026 were:

• New multiplier structure: A restructured set of five multipliers will replace the current two-rate system. Lower rates apply to smaller and RHL properties, while a higher rate applies to high-value properties with a rateable value of £500,000 or above.
• Permanent RHL multiplier: Two new, permanently lower multipliers will apply to qualifying RHL properties. Properties with a rateable value below £51,000 use the 38.2p small business RHL rate. Those with a rateable value between £51,000 and £499,999 use the 43.0p standard RHL rate. Both replace the temporary annual relief scheme.
• Revaluation cycle: Rateable values (RVs) are updated every three years to reflect the property market, with the latest revaluation having taken effect on 1 April 2026.

These changes apply to England. Scotland, Wales, and Northern Ireland set their own rates and relief schemes independently, so check the relevant government website for your nation.

Plan your business rates alongside other costs

Business rates are a fixed cost that sits alongside rent, utilities, and insurance. Planning for them as part of your broader financial picture helps you avoid cash flow surprises and frees up budget for growth.

Simple tools can make a big difference. Cloud accounting software like Xero lets you capture bills, plan instalments, and forecast cash flow in one place – so you can see exactly what you owe, when it's due, and how reliefs have reduced your bill. This keeps your focus on running your business, and making the decisions that matter.

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FAQs on business rates

This section answers common questions about business rates.

How much are UK business rates?

Your bill depends on your property's rateable value and the multiplier set for your nation and property type. As a rough guide, a property with a rateable value of £20,000 in England would face a gross bill of around £8,640 per year using the 2026/27 small business multiplier of 43.2p, before any reliefs are applied.

Are business rates paid monthly?

They can be. Business rates are billed annually, but most councils let you pay in ten monthly instalments from April to January. You can also pay in full if you prefer. Check your council's payment options and set up Direct Debit to automate payments and avoid missed deadlines.

Is there VAT on business rates?

No. Business rates are a property tax, not a supply of goods or services, so they're outside the scope of VAT.

Do you pay business rates on land?

It depends on how the land is used. Non-domestic land used for business purposes – like car parks, storage yards, or advertising hoardings – can be liable for business rates. Agricultural land is generally exempt. If you're unsure whether your land is rateable, check with your local council or the Valuation Office Agency.

How do I find my business rates?

Use the GOV.UK Find a business rates valuation service for England and Wales. Enter your property address or postcode to see your rateable value and billing authority. In Scotland, use the Scottish Assessors Association search, and in Northern Ireland, check Land & Property Services.