Business Rates Relief

Business rates are a tax on the occupation of non-domestic property — including shops, offices, pubs, warehouses and factories. They are the commercial equivalent of council tax, and are set and collected by local authorities. Some revenue is retained locally, but most is redistributed by central government to councils under financial pressure. 

Bills are based on each property’s “rateable value” — an assessment by the Valuation Office Agency (VOA) of the annual rent the property might command. A nationally set “multiplier” (pence in the pound) is then applied to calculate the bill, uprated each year in line with inflation. For example, a rateable value of £60,000 at a multiplier of 54.6p produces a bill of £32,760, before the application of any reliefs.

Business rates raise more than £25 billion annually in England alone, making them a major source of local government funding. They are one of the largest fixed costs for small firms — alongside rent and utilities — and hit hardest those with physical premises in high-value areas such as high streets and town centres.

Successive governments have introduced reliefs to lower the cost of business rates to payers, including Small Business Rate Relief, Retail, Hospitality and Leisure Relief for SMEs, and temporary discounts during the COVID-19 pandemic. Revaluations every three years aim to keep bills more in line with current rental values.

Further Reading

• GOV.UK — Business rates relief

• AXA S.A. — Small business rates relief: what you need to know