Understanding Business Rates in England: A Plain English Guide (2025/26)
Business rates are the local property tax that commercial businesses pay on their premises in England. If you occupy an office, shop, workshop, warehouse, or any other commercial space, you will almost certainly pay them. Here is how they work.
What are business rates?
Business rates (officially Non-Domestic Rates) are collected by your local council and partly redistributed to central government. They are charged on most commercial premises — shops, offices, pubs, warehouses, factories — based on the assessed rental value of the property.
How rates are calculated
Your bill is calculated by multiplying two numbers:
Rateable value (RV) — this is the Valuation Office Agency's (VOA) estimate of the annual market rental value of your property. You can find your RV at voa.gov.uk. Rateable values were last revalued in April 2023.
Multiplier — for 2025/26 there are two multipliers: the small business multiplier of 49.9p (applies if your RV is below £51,000) and the standard multiplier of 54.6p (applies to larger properties).
Practical example: a warehouse with a rateable value of £20,000, using the standard multiplier: £20,000 × 0.546 = £10,920 in rates before any reliefs.
Small Business Rate Relief (SBRR)
If you occupy a single property and your rateable value is £12,000 or below, you pay nothing — 100% relief. If your RV is between £12,001 and £15,000, you get tapered relief: the percentage reduces gradually until you reach the full rate at £15,001.
You must apply for SBRR through your local council. It is not applied automatically in all areas.
Other reliefs and exemptions
Mandatory charity relief: registered charities receive 80% mandatory relief on their business rates. Local authorities can top this up to 100%.
Rural rate relief: businesses in rural settlements with a population below 3,000 may qualify for 100% rural rate relief if they are the only shop, pub, or petrol station in the village.
Enterprise zone relief: businesses in designated enterprise zones can receive 100% relief for up to five years.
Discretionary relief: local councils have discretionary powers to grant relief for businesses that provide a community benefit, even if they do not meet the criteria above.
When do you become liable?
You become liable for business rates on the date you take occupation of the property, or — if the property is empty — the date the property became empty. Empty properties are usually exempt for the first three months (six months for industrial properties), after which standard rates apply.
How to appeal your rateable value
If you believe your rateable value is too high — for example, because your premises have been incorrectly measured or comparable properties have lower values — you can challenge it through the VOA's Check, Challenge, Appeal process at ratesforum.bst.gov.uk. You must first check your details, then challenge the valuation, and only appeal to the independent Valuation Tribunal if the challenge is unsuccessful.
The 2023 revaluation and transitional arrangements
The April 2023 revaluation significantly changed rateable values for many businesses. To cushion large increases, the government introduced transitional relief arrangements that phase in big increases over several years. Check with your local council whether your bill has been affected and whether you are benefiting from these transitional caps.
Understanding your rates bill — and claiming every relief you are entitled to — can save a small business hundreds or thousands of pounds each year.
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