Quick Answer
Business rates are a property tax on most commercial buildings in England. They are worked out by multiplying the property’s rateable value (its estimated annual rent, set by the Valuation Office Agency) by a multiplier set by the government. Since 1 April 2026, rateable values are based on rents as at 1 April 2024, and there are five multipliers, from 38.2p to 50.8p, depending on the property’s value and use. Tenants usually pay the rates on let property, but landlords pay them when a property is empty, after a short relief period. Reliefs, including Small Business Rate Relief, can cut the bill substantially, and from April 2027 small shops, pubs and cafés with a rateable value of up to £18,000 will pay nothing.
What Are Business Rates?
Business rates are a tax on non-domestic property, such as shops, offices, warehouses, factories and pubs. Your local council collects them, and they help pay for local services.
The simplest way to think about it is that business rates are council tax for commercial property. The big difference is that, instead of a band based on house prices, the bill is based on what the building could be let for.
This guide covers the rules in England. Wales and Scotland run their own systems.
How Are Business Rates Calculated?
The formula is simple:
Rateable value × multiplier = business rates bill (before reliefs)
Rateable value
The Valuation Office Agency (VOA) sets a rateable value for every commercial property. It is the VOA’s estimate of the open market rent for a year, on a fixed valuation date.
The current list took effect on 1 April 2026 and is based on rental values at 1 April 2024. Revaluations now happen every three years, so the next one is due in 2029.
The five multipliers from April 2026
April 2026 brought a big change. The old two multipliers were replaced with five:
| Property type | Rateable value | Multiplier |
| Retail, hospitality and leisure | Under £51,000 | 38.2p |
| All other properties | Under £51,000 | 43.2p |
| Retail, hospitality and leisure | £51,000 to £499,999 | 43.0p |
| All other properties | £51,000 to £499,999 | 48.0p |
| All properties | £500,000 and above | 50.8p |
The lower retail, hospitality and leisure multipliers replaced Retail, Hospitality and Leisure Relief, which ended on 31 March 2026.
A worked example
Say you own two units in Stoke-on-Trent, each with a rateable value of £30,000:
- A shop: £30,000 × 0.382 = £11,460 a year
- An industrial unit: £30,000 × 0.432 = £12,960 a year
Same rateable value, but a £1,500 difference, simply because of how each one is used. For 2026/27 only, some ratepayers also pay a 1p supplement to fund transitional relief, so check your bill carefully.
Reliefs and Exemptions
Reliefs can cut a bill dramatically, but many are not applied automatically. These are the main ones.
Small Business Rate Relief
If your business occupies only one property (or one main property plus small extras), you may qualify:
- Rateable value up to £12,000: 100% relief, so nothing to pay
- £12,001 to £15,000: relief tapers down gradually
- From 1 April 2027: retail, hospitality and leisure properties get full relief up to £18,000, tapering to £21,000
If you take on a second property, you normally keep Small Business Rate Relief on the first for three years.
Transitional and Supporting Small Business Relief
If your bill jumped because of the 2026 revaluation, transitional relief caps how much it can rise each year. If you lost Small Business Rate Relief at the revaluation, Supporting Small Business Relief limits your increase to the higher of £800 a year or the transitional relief cap.
Other reliefs
- Charitable relief: 80% for properties used by charities
- Rural rate relief: for village shops and pubs in qualifying rural areas
- Pubs and live music venues: an extra reduction on top of other reliefs
Empty Property: The Landlord’s Bill
Business rates hit landlords hardest when a property is empty. Once a tenant leaves, the bill passes to you.
- Most properties: three months rates-free, then full rates
- Industrial and warehouse units: six months rates-free
- Fully exempt: listed buildings and properties with a rateable value under £2,900
Here’s how that works in practice. Imagine an industrial unit in Longton with a rateable value of £30,000 that sits empty for a year. The first six months are free, but the next six months cost around £6,480. That money comes straight out of your pocket, which is why pricing a unit realistically and reletting it quickly matters so much.
A short let won’t reset the clock unless the property is occupied for at least 13 weeks.
How Business Rates Affect Your Commercial Property
Tenants weigh up the total cost
When a tenant compares premises, they look at rent, service charge and rates together. A high rates bill can make an otherwise good unit harder to let, or push down the rent a tenant is willing to pay.
They affect value
Investors look at what a building costs to run. A rateable value that is out of step with the rent can put buyers off and weigh on value.
They hit cash flow
Revaluations, lost reliefs and backdated bills can all arrive with little warning. Budget for rates as carefully as you budget for the rent. Our guide to the hidden costs of commercial property ownership covers the other costs to plan for.
They belong in the lease
Most commercial leases make the tenant responsible for business rates while they occupy the building. Check the wording before you sign, especially in multi-let buildings. Our guide to renting a commercial property explains what else to look out for.
Can You Challenge Your Rateable Value?
Yes. If you think your rateable value is too high, you can challenge it through your VOA business rates valuation account using the “Check, Challenge, Appeal” process:
- Check: confirm the facts the VOA holds about your property, such as size and use.
- Challenge: argue that the valuation is wrong, with evidence such as rents on similar properties.
- Appeal: if you still disagree, take it to the independent Valuation Tribunal.
You need evidence for a successful challenge, which is where a surveyor with local rental knowledge earns their fee.
Why Professional Advice Pays
Business rates look simple, but the detail catches people out. Bills are issued on the wrong multiplier, reliefs aren’t claimed, and rateable values go unchallenged. Our RICS-registered team checks rateable values against local evidence, makes sure you’re claiming every relief you qualify for, and handles challenges on your behalf.
Summary
Business rates are worked out by multiplying a property’s rateable value by one of five multipliers introduced in April 2026. Tenants usually pay them, but landlords pick up the bill when a property is empty, after three months, or six for industrial units. Small Business Rate Relief, transitional relief and the new lower multipliers for shops, pubs and cafés can all reduce the bill, and from April 2027 more small retail, hospitality and leisure businesses will pay nothing at all. If your bill looks wrong or your rateable value seems high, it’s worth getting it checked.
For advice on business rates, reliefs or challenging your rateable value, call Rory Mack Associates on 01782 715725 or contact us online.
Frequently Asked Questions
Who pays business rates, the landlord or the tenant?
The person in occupation pays, which is usually the tenant under the lease. When a property is empty, the owner (usually the landlord) pays, after any empty property relief has run out.
What is the business rates multiplier for 2026/27?
There are five. For properties under £51,000 rateable value, retail, hospitality and leisure properties pay 38.2p and all others pay 43.2p. Between £51,000 and £499,999 the rates are 43.0p and 48.0p. Properties worth £500,000 or more pay 50.8p.
How long can a commercial property be empty before paying business rates?
Most properties get three months rates-free, and industrial and warehouse units get six months. After that, full rates apply. Listed buildings and properties with a rateable value under £2,900 are exempt while empty.
Do I qualify for Small Business Rate Relief?
You may, if your business uses one property with a rateable value below £15,000. You pay nothing up to £12,000, with tapered relief up to £15,000. From April 2027, retail, hospitality and leisure properties get full relief up to £18,000.
How do I check if my rateable value is correct?
Log in to your business rates valuation account with the VOA and check the details they hold. If the size or use is wrong, or similar properties nearby have lower values, you can start a challenge. A local surveyor can help you gather the evidence.
