What Are Business Rates?

If you use a building or part of a building for non-domestic purposes – it’s likely that you’ll have to pay business rates.

Business rates are an important part of owning a business and are charged on most non-domestic properties such as offices, shops, factories, warehouses, restaurants, pubs and more.

Here’s our guide on what business rates are and when you may be exempt from paying any business rates.

1. Overview of Business Rates

Business rates are calculated on the property that you run your business out of, whether that be an office, restaurant, warehouse, or factory. Business rates are handled differently depending on which part of the UK you’re in, therefore, it’s best to check specifics on your Government’s website.

Local councils are responsible for sending business rates bills in February or March of every year, stating your business rates for the following tax year.

There are exceptions regarding business rates, which may mean you don’t have to pay them, depending on your business’ premises and its value.

2. How Much Are Business Rates

Estimating your business rates will include knowing the rateable value of your property which is managed by the Valuation Office Agency (VOA). To work out how much should be paid – multiply the rateable value of your property by your multiplier, which tells you the number of pence you pay per pound of ratable value.

As an example, this table from the Government’s website, alongside their guide on a quick estimation for business rates.

Year       Standard multiplier          Small business multiplier

2023 to 2024      51.2 pence          49.9 pence

2022 to 2023      51.2 pence          49.9 pence

2021 to 2022      51.2 pence          49.9 pence

3. Business Rates Relief

There are several ways you can reduce your business rates bill, some reliefs exist for specific organisations and also small businesses. Making sure that you’re aware of exemptions will mean you won’t be overcharged and will save as much as possible.

Full relief is available on properties with a rateable value of £12,000 or less and for those between £12,001 and £15,000, relief goes down gradually from 100 per cent to zero per cent.

There you have it – business rates are something that most businesses have to pay if they operate from a non-domestic premises, however, there are plenty of exceptions that should be explored to save as much as possible.