Business Rates Explained

Your business rates bill is calculated by multiplying your property's rateable value (RV) by the business rates multiplier. The rateable value is an estimate of the annual rental value of the property at a fixed valuation date — currently 1 April 2021 for the 2023 revaluation. Rateable values are set by the Valuation Office Agency (VOA), an HMRC executive agency, and are updated roughly every three years at revaluation.

The multiplier is set annually by central government. For 2025/26 there are two rates: the small business multiplier (49.9p in the pound) for properties with an RV under £51,000, and the standard multiplier (54.6p) for larger properties. So a property with an RV of £20,000 using the small business multiplier would have a gross bill of £9,980 before any reliefs. Bills are sent by the local authority — not the VOA — and can be paid in monthly instalments.

Several reliefs can substantially reduce or eliminate your business rates bill:

• Small Business Rate Relief (SBRR): properties with an RV under £12,000 receive 100% relief (zero rates). Properties between £12,001 and £15,000 receive tapered relief. You must apply to your local authority and have only one property to qualify for the full relief (special rules apply if you occupy more than one)
• Retail, Hospitality and Leisure Relief: introduced as a COVID measure and extended, this provides a percentage discount (75% in 2025/26, capped at £110,000 per business) for eligible retail, hospitality, and leisure properties
• Mandatory rural rate relief: for businesses in designated rural areas with a population under 3,000
• Charitable rate relief: registered charities and community amateur sports clubs receive at least 80% mandatory relief
• Empty property relief: unoccupied properties receive full relief for 3 months (6 months for industrial properties), then pay full rates — though there are various anti-avoidance rules

If you believe your rateable value is too high — perhaps because comparable properties are valued lower, or because the VOA used incorrect information about your property — you can challenge it through the Check, Challenge, Appeal (CCA) process. This three-stage process starts with a Check (confirming or correcting the facts about your property with the VOA), proceeds to a Challenge (submitting a formal proposal for a new RV), and finally an Appeal to the Valuation Tribunal if the Challenge is not resolved satisfactorily.

The CCA process is time-limited — you have 18 months to submit a proposal after a new list comes into force. A successful challenge can result in a reduced rateable value backdated to the start of the list, generating a refund of overpaid rates. You can use a professional rating surveyor to navigate the process, though their fees should be weighed against the potential saving. The VOA's website provides comparable evidence and property information to help you assess whether a challenge is worthwhile.

Business rates remain one of the most contentious property taxes for UK businesses, particularly in the retail, hospitality, and leisure sectors where high street properties often carry disproportionately high rateable values relative to online competitors who pay less. The government has committed to a fundamental reform of business rates, but the precise shape of a replacement system is still under consultation as of 2025/26.

In the interim, the next general revaluation is planned for 2026, based on rental values at 1 April 2025. Moving to more frequent revaluations (currently every three years, with more regular cycles proposed) is intended to ensure rateable values track market rents more closely — reducing the mismatch that built up between the 2017 and 2023 lists, when rateable values diverged substantially from actual market conditions following the COVID-19 pandemic.

The Autumn Budget 2024 confirmed the continuation of Retail, Hospitality and Leisure (RHL) Relief at 40% (reduced from 75%) from 2025/26, capped at £110,000 per business. The reduction was controversial — the British Retail Consortium and UK Hospitality both warned it would result in significant additional costs for high street operators already under margin pressure. Businesses in the eligible sectors should check the updated relief levels with their local authority billing office each April and ensure they are applying for all reliefs they are entitled to, including any discretionary reliefs available locally.