Local councils charge Business Rates on most non-domestic properties. Councils use these funds to support local services, such as waste collection and fire services.
You will usually pay Business Rates on properties such as:
- Shops and retail units
- Offices and studios
- Pubs and restaurant
- Warehouses and factories
- Workshops and storage units
- Guest houses and some holiday lets
You may still pay Business Rates if you use only part of a building for business.
For example: A shop with a flat above it creates a mixed-use property. In this scenario, the business part attracts Business Rates, while the residential part attracts Council Tax.
Do I Have to Pay Business Rates?
In most cases, you must pay Business Rates when you occupy a property for business use. The key word is occupy. This means you use the premises to run your business.
You will normally pay Business Rates when you:
- Trade from premises you own or rent
- Use a unit mainly for storage or production
- Provide services from a location customers visit
However, some situations create confusion. For instance, serviced offices and coworking spaces often include Business Rates within the rent. You may not receive a separate bill. Even so, the building still appears on the rating list.
When Do Bills Arrive and How Do You Pay?
Your local council normally sends your Business Rates bill in February or March. The bill covers the following tax year, which starts in April. Most councils spread payments across 10 monthly instalments from April to January. Many councils also offer 12 instalments to help with cash flow.
You can usually pay by:
- Direct Debit
- Online payment portal
- Telephone payment
- Bank transfer
- Post (depending on local arrangements)
If you struggle to pay, you must contact your council immediately. Prompt action often prevents additional costs or enforcement action. In some cases, councils will agree a payment plan.
How Councils Calculate Business Rates
Councils calculate your bill using two figures:
- Rateable Value
- The Multiplier
Reliefs, exemptions and transitional schemes can also affect the final amount. Therefore, two similar properties can still produce different bills.
Rateable Value
The Valuation Office Agency (VOA) sets the rateable value in England and Wales. The VOA estimates the yearly rent a property could achieve on a specific valuation date. This figure does not always match your actual rent.
Rateable value reflects factors such as:
- Location
- Size and layout
- Property use
- Condition (based on rating assumptions)
The next valuation takes effect on 1 April 2026. It uses rental values from 1 April 2024. As a result, many properties will receive a new rateable value.
The Multiplier
Councils multiply your rateable value by the multiplier. This produces your basic annual bill before relief.
Rateable value x Multiplier = Annual bill (before relief)
For 2025/26, England applies:
| Multiplier | Amount |
|---|---|
| Standard Multiplier | 55.5p (rateable value £51,000 or more) |
| Small Business Multiplier | 49.9p (rateable value below £51,000) |
Changes from April 2026
Several changes start of 1 April 2026. Some businesses will see higher rateable values. However, revised multipliers aim to soften the impact.
Revaluation
Revaluation updates rateable values for all properties. It also resets multipliers. Therefore, a higher rateable value does not automatically mean a higher bill. You should check your updated valuation before April 2026.
New Multipliers for 2026/27
Lower multipliers will apply in many cases.
| Non-retail, hospitality and leisure properties (rateable value up to £500,000) | 48p for rateable value between £51,000 and £500,000 43.2p for rateable value under £51,000 |
| Non-retail, hospitality and leisure properties (rateable value under £500,000) | 43p for rateable value between £51,000 and £500,000 38.2p for rateable value under £51,000 |
Properties with very high rateable values may face a different multiplier. The City of London can also apply separate arrangements.
Transitional Relief
Revaluation can cause sharp increases. Transitional relief limits how much your bill can rise each year. As a result, businesses can adjust gradually. Transitional Relief often applies automatically. Nevertheless, you should review your bill carefully.
Supporting Small Business Relief
Some businesses lose existing relief when rateable values increase. Supporting Small Business Relief limits bill increases in 2026/27:
In many cases, the increase will not exceed £800 or a percentage cap linked to rateable value (whichever is higher). This measure protects smaller businesses from sudden cost spikes.
Reliefs That Can Reduce Your Tax Bill
Small Business Rate Relief
This relief supports smaller premises:
- 100% relief for rateable values up to £12,000
- Tapered Relief between £12,001 and £15,000
This relief usually applies to one main property. However, businesses with additional properties may still qualify under certain limits.
Retail, Hospitality and Leisure Support
Many eligible properties receive targeted help. In 2025/26, sector support remains available in many cases. From April 2026, lower multipliers will support eligible properties on a more permanent basis.
Rural Rate Relief
Rural Relief supports qualifying village shops, pubs and petrol stations. Councils can also grant discretionary relief in some cases.
Charitable Relief
Charities and community amateur sports clubs can receive significant reductions. This relief helps protect essential community services.
Hardship Relief
Councils may grant hardship relief where a business faces financial difficulty and local interests benefit from support. Councils will usually request evidence.
Who Does Not Need to Pay Business Rates?
Certain properties qualify for exemption. These include:
- Many farm buildings and agricultural land
- Buildings used for the welfare or training of disabled people
- Places of public religious worship
Empty properties can also receive temporary relief. The length of relief depends on property type.
Working From Home
Most home-based businesses do not pay Business Rates. This applies when you:
- Use a small area (such as a bedroom office)
- Sell goods mainly by post
However, you may trigger Business Rates when you:
- Receive regular customer visits
- Employ staff at your home
- Convert part of the property mainly for business use
Mixed-use properties can attract both business rates and Council Tax.
Holiday Lets and Guest Accommodation
Some holiday lets fall within business rates. However, the rules depend on availability and actual letting.
In England:
- The property must offer at least 140 nights for short-term letting
- The property must achieve at least 182 nights of actual letting
These tests look at the previous 12 months and future intentions. If you currently pay Council Tax and meet the criteria for Business Rates, you must inform the VOA. You will normally confirm eligibility each year.
Pubs and the Licensed Trade
The VOA often values pubs using trading information. The assessment considers expected turnover and operating style.
The valuation may reflect:
- Location and property type
- Trading patterns and services offered
- Rent and accommodation income
- Comparable evidence from similar pubs
Pubs may also qualify for sector-specific support.
Stables and Specialist Premises
Some properties require special consideration. Stables provide a common example.
You will usually pay Business Rates on stables. However, you may not pay when you use horses for farming purposes. Stables located within domestic grounds may fall under Council Tax instead.
If Your Premises or Business Changes
Property changes can affect your bill. You should report changes promptly, including:
- Extensions, splits or mergers of premises
- Subletting part of the property
- Changes in property use
- Alterations to trading space
- Changes to parking or access
Timely updates reduce the risk of backdated increases.
If You Face Local Disruption
Serious disruption can affect trade.
For example: Flooding or major roadworks can reduce customer access.
In some cases, authorities may adjust Business Rates temporarily. You should report disruption quickly and retain supporting evidence.
How to Challenge a Rateable Value
If you believe the VOA has set an incorrect value, you can take action.
You can use a Business Rates valuation account to:
- Confirm property details
- Report factual changes
- Start a challenge
The process follows three stages:
| Stage | Process |
|---|---|
| Check | Confirm and correct property facts |
| Challenge | Present evidence and propose a revised valuation |
| Appeal | Refer the case to an independent tribunal if necessary |
You can challenge the current rating list until 31 March 2026. You can challenge the new list from 1 April 2026. If the VOA requests rental or lease information, you should respond promptly. If needed, you can request additional time.
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This article is for general informational purposes only and does not constitute legal or financial advice. While we aim to keep our content up to date and accurate, UK tax laws and regulations are subject to change. Please speak to an accountant or tax professional for advice tailored to your individual circumstances. Pi Accountancy accepts no responsibility for any issues arising from reliance on the information provided.