How To Calculate Your Business Rates
Business rates are a form of tax levied on commercial properties such as shops, warehouses, and factories. These taxes are paid by the property occupier to the local council and are used to fund local services. The amount payable is determined by the…
Business rates are a form of tax levied on commercial properties such as shops, warehouses, and factories. These taxes are paid by the property occupier to the local council and are used to fund local services. The amount payable is determined by the property's estimated rental value and a government-set multiplier.
Non-domestic properties used for business purposes, including restaurants, pubs, warehouses, and leisure venues, are generally liable for business rates. Some properties, such as agricultural and religious buildings, may be exempt. Verification with the local council is recommended for specific exemptions.
Significant changes to business rates will be implemented in April 2026:
Revaluation of all business properties, last assessed in 2021. Expansion of the multiplier list from two to five. Introduction of new reliefs to assist small businesses facing increased costs due to the revised rates.
Business rates are calculated based on two main factors:
Rateable Value: Determined by the Valuation Office Agency (VOA). Multiplier: Annually set by the government.
The council applies the multiplier to the rateable value and subtracts any applicable relief before billing the business.
Locate the rateable value by visiting the official website with the property address.
For the 2025-26 tax year, two multipliers apply:
Business rates are a form of tax levied on commercial properties such as shops, warehouses, and factories.
Small Business Multiplier: 49.9p for properties below £51,000 Standard Multiplier: 55.5p for properties £51,000 or above
From April 2026, the multipliers will expand as follows:
Non-RHL Businesses:
Small Business Multiplier: 43.2p for properties below £51,000 Standard Multiplier: 48p for properties between £51,000 and £499,999 High Value Multiplier: 50.8p for properties £500,000 or above
RHL Businesses:
Small Business Multiplier: 38.2p for properties below £51,000 Standard Multiplier: 43p for properties between £51,000 and £499,999
Multiply the rateable value by the appropriate multiplier to obtain the annual business rates bill before relief. For example:
Non-RHL business with a rateable value of £60,000: £60,000 × 0.48 = £28,800 per year. RHL business with the same rateable value: £60,000 × 0.43 = £25,800 per year.
Businesses may qualify for relief, such as transitional relief, small business relief, or EV charging point relief. It is essential to apply for these and only deduct post-relief amounts from taxable income.
If a rateable value is deemed inaccurate, businesses can challenge it. Current rates should be contested by March 31, 2026. For new rates from April 2026, challenges should be submitted as soon as discrepancies are identified.
The council typically issues bills in spring, offering options to pay in full or in installments. Payments can be made online, via phone, or through Direct Debit, with additional methods varying by location.
Business rates are tax-deductible and can reduce taxable income for companies and sole traders. Only the final amount paid, after any relief, should be deducted.
Preparing for Business Rate Changes in 2026
With changes to business rates in 2026, businesses should:
Verify and challenge rateable values promptly. Determine applicable multipliers and apply for relief in advance. Budget for potential increases and address discrepancies proactively.
Understanding these changes can help mitigate unexpected financial impacts.
Based on reporting by techround.co.uk.