Finance⏱ 5 min read
How Business Rates Are Calculated in the UK
Business rates are a significant overhead for commercial property occupiers. Here is how rateable value is set, how to calculate the actual bill, and what reliefs may reduce it.
Business rates (non-domestic rates) are a tax on the occupation of non-residential property in England. They are calculated from rateable value — an estimate of annual rental value — multiplied by the national multiplier set each year by central government.
The Business Rates Formula
Business Rates Bill = Rateable Value x Multiplier
Rateable Value (RV): set by the Valuation Office Agency (VOA)
based on the estimated open market rental value at the antecedent
valuation date (currently 1 April 2021 for the 2023 revaluation).
National multiplier 2024/25:
Standard multiplier: 54.6p (0.546)
Small business multiplier: 49.9p (0.499)
Example: RV of £24,000, small business:
Annual business rates = £24,000 x 0.499 = £11,976
Monthly: £998
Small Business Rate Relief (SBRR)
Available to businesses with only ONE UK property:
RV £12,000 or below: 100% relief (zero business rates)
RV £12,001 to £15,000: tapered relief (100% down to 0%)
Tapered relief calculation:
Relief % = (£15,000 - RV) / £3,000 x 100
Example: RV £13,500
Relief % = (15,000 - 13,500) / 3,000 x 100 = 50%
Bill before relief: £13,500 x 0.499 = £6,736.50
Relief: £6,736.50 x 50% = £3,368.25
Final bill: £3,368.25
Note: you must apply for SBRR -- it is not automatic in all areas.
Some councils apply it automatically; others require an application.
Other Business Rate Reliefs
Retail, Hospitality and Leisure Relief (2024/25):
75% relief on bills up to a £110,000 cap per business
Applies to: shops, pubs, restaurants, gyms, hotels
Must be the property's PRIMARY use
Charitable Relief:
Mandatory: 80% relief for registered charities
Discretionary: councils can grant the remaining 20%
Empty Property Relief:
First 3 months: 100% relief
After 3 months: full rates payable on most properties
Industrial/storage: 6 months empty relief
Listed buildings: 100% relief indefinitely (while empty)
How to Challenge Your Rateable Value
If you believe your RV is too high:
Step 1: CHECK -- view your property's RV on the VOA website
Step 2: CHALLENGE -- submit a challenge via the Check-Challenge-Appeal process
Step 3: APPEAL -- if challenge fails, appeal to the Valuation Tribunal
Grounds for challenge:
- Market rental evidence showing lower rents in your area
- Property condition issues reducing rental value
- Errors in floor area or description
Timeline: 2-year window from April 2023 for 2023 revaluation challenges
Success rate: approximately 25-35% of challenges result in reduced RV
Average reduction: approximately 15-20% of RV for successful cases