Introduction to business rates

If you operate your business from your home, you may be expected to pay business rates rather than council tax. 

The government does not normally expect you to pay business rates if you: 

• Only use a small part of your home for your business. 
• Don’t use it to sell goods or services to members of the public.  
• Don’t employ other people to work at the premises.
• Don’t make alterations that are not for a domestic purpose.

More information about what qualifies as a home-based business can be found here.

Business rates are calculated based on what’s known as your property’s ‘rateable value’. 

The Valuation Office Agency (VOA) uses an estimate of how much it would cost to rent a property for a year on 21 April 2021.

You can estimate your business rates by multiplying the rateable value by the correct ‘multiplier’. The multiplier is set by the central government.

More information on calculations can be found here.

Revaluations of the rateable value of business properties usually happen every five years and are again carried out by the VOA.

The VOA adjusts the rateable value to reflect changes in the property market. The most recent revaluation came into effect in England and Wales on 1 April 2023.

At revaluation, the VOA adjusts the rateable value of business properties to reflect changes in the property market.

Some business properties may be eligible for relief on their business rates.

Your local authority can provide specific guidance on this.  

For example, Small Business Rate Relief (SBRR) entitles businesses to a discount if they:  

• Only use one property 
• Use a property with a rateable value of less than £15,000 

You also automatically won’t pay business rates on a property with a rateable value of £12,000 or less. 

For properties with a rateable value of £12,001 to £15,000, the rate of relief will go down gradually from 100% to 0%.  

If your business is in a rural area with a population below 3,000, you could get Rural Rate Relief.

Charities and amateur community sports clubs can apply for Charitable Rate Relief of up to 80% if their property is used for charitable purposes.  

If your business is starting up or relocating to an Enterprise Zone (EZ), you could qualify for Enterprise Zone Relief. The local council works out how the relief is applied and it could be worth up to £55,000 a year over five years.  

Certain properties such as agricultural land and buildings, fish farms, buildings used for training or welfare of disabled people and buildings registered for religious worship are exempt from business rates via the Exempted and Empty Buildings Relief.

You don’t have to pay business rates on empty buildings for three months. After this time though, most businesses must pay full rates.  

If you're a retail, hospitality or leisure business, you may be eligible for 75% rates relief - up to £110,000 per business. Find out more information here.

Hardship Relief - To be eligible for hardship relief your business will need to satisfy your local council that you would be in financial difficulty without it.

Transitional Relief limits how much your bill can change each year as a result of revaluation. This means changes to your bill are phased in gradually if you’re eligible.

Local Newspaper Relief for those using buildings as office premises for local journalists or reporters. Note that this will end on 31 March, 2025.

The local council will send a business rates bill in February or March each year. This is for the following financial year.

Payment instalments may be arranged at the discretion of the local authority.

If you think you may be overpaying for business rates, you can query them for free with the VOA. You can do this online.

You can also get professional advice on business rates from a qualified rating surveyor through one of the following organisations:  

• Royal Institution of Chartered Surveyors (RICS) 
• Institute of Revenues, Rating and Valuation (IRRV) 

• Rating Surveyors Association 

The RICS list a few companies offering a free 30-minute initial consultation on business rates.

In certain cases, and when all other options have been exhausted, you may be able to approach the Adjudicators Office (AO).

The AO offers a free service and helps resolve complaints from individuals and businesses who remain unhappy about the way their affairs have been handled by the VOA.  

It will only investigate a case after a complaints procedure has been exhausted. You can contact the AO on 03000 57 1111