A Guide to Business Rates for UK Businesses

Starting a business involves many financial responsibilities and one that often surprises new UK entrepreneurs is business rates. If your startup operates from a commercial property, it’s likely you’ll need to pay them. But what exactly are business rates? Who pays them? And are there any reliefs available?

This business rates guide UK is designed to help new businesses understand how business rates work, how they’re calculated, and what support might be available.

What Are Business Rates?

Business rates are a form of property tax charged on most non-domestic properties in the UK. If your startup operates from a physical location, such as an office, shop, or warehouse chances are you’ll need to pay them. Business rates are an important source of income for local authorities and help fund services like street cleaning, waste collection, and local infrastructure.

The rates are set by central government (specifically, the Valuation Office Agency, or VOA, under HMRC), but collected by your local council. Once assessed, you’ll receive a bill annually – usually in February or March detailing what you owe for the coming financial year, which starts in April.

Who Needs to Pay?

If you own or lease a commercial property, you’re likely liable for business rates, even if the premises are only partly used for business activities. Landlords may also be liable in certain circumstances, such as when a property is unoccupied.

Business rates typically apply to:

• Companies operating from offices
• Retail businesses in shops, salons, or showrooms
• Food and drink outlets such as cafés, restaurants, and pubs
• Industrial and storage spaces like factories or warehouses
• Specialised facilities such as gyms, nurseries, and medical clinics

Who Has to Pay Business Rates?

In general, the occupier of the property is responsible for paying business rates. This could be the property owner or tenant, depending on the lease agreement.

You’re responsible for paying if:

• You’re running a business from commercial premises
• You work from home but have a dedicated area solely for business use
• You are a landlord with a commercial property that’s unoccupied (in some cases)

How Are Business Rates Calculated?

Understanding how business rates are worked out is essential for budgeting and cash flow planning especially in the early stages of your business. Business rates aren’t a flat fee; they’re calculated based on the rateable value of your property and a multiplier set by the government.

Step 1: Determine the Rateable Value

The rateable value of your property is assessed by the Valuation Office Agency (VOA). It represents the estimated annual rent the property could have achieved on the open market at a fixed valuation date. For the current business rates cycle, the valuation is based on rental values as of 1 April 2021, and applies from 1 April 2023 onwards.

This value is not what you’re actually paying in rent, it’s an estimate made by the VOA, which considers factors such as:

• Location
• Size and layout
• Type of property
• Usage (e.g. shop, office, industrial unit)

To find your property’s rateable value, use the official VOA tool: Check the rateable value of your property

Step 2: Apply the Multiplier

Once you have the rateable value, you multiply it by the business rates multiplier set by central government. This gives you your annual business rates bill before any reliefs or discounts.

There are two multipliers:

• Standard Multiplier – for properties with a rateable value over £51,000
• Small Business Multiplier – for properties with a rateable value of £51,000 or less

For the financial year 2024/25, the multipliers are:

• Standard multiplier: 54.6p
• Small business multiplier: 49.9p

So, for example:

If you qualify for Small Business Rates Relief (SBRR) or other discounts, your final bill may be significantly lower or even reduced to zero.

Step 3: Factor in Reliefs or Exemptions

Many startups and small businesses qualify for reliefs that reduce the final amount due. These are not applied automatically in most cases and usually you’ll need to apply through your local council.

Business Rates Relief for Startups

One of the most important things for new businesses to know is that relief schemes exist to reduce your bill – especially if you run a small business or occupy a single property.

1. Small Business Rates Relief (SBRR)

• Available if your rateable value is less than £15,000
• Properties with a rateable value below £12,000 usually pay no business rates
• Tapered relief applies from £12,001 to £15,000

Apply here: Small Business Rates Relief – GOV.UK

2. Rural Rate Relief

• For businesses in rural areas with a population under 3,000
• You could get 100% relief if you’re the only village shop or post office

3. Charitable Rate Relief

• Charities and community amateur sports clubs can get up to 80% relief
• Local councils may grant further discretionary relief

4. Enterprise Zones and Local Discounts

• Some locations offer additional business rate incentives
• Check with your local council for schemes in your area