Learn about business rates on commercial properties that could affect you as a tenant. Our guide covers all areas of business rates, including how to estimate rates for any commercial property that you may be considering.
Business rates are a local tax that is paid by the occupiers of a non-domestic property in England and Wales.
Business rates are calculated by multiplying the rateable value of the property (which is given by the VOA) by a factor set annually by the government, known as the multiplier. The multiplier is also known as the uniform business rate, which is set by Communities and Local Government in England and Welsh Assembley in Wales. Please see a table below for the current multipliers (2016/2017) for England, Wales and London.
| Location | Standard businesses | Small Businesses |
|---|---|---|
| England | 49.7p | 48.4p |
| Wales | 48.6p | N/A |
| London | 51.7p | 49.7p |
*Contains public sector information licensed under the Open Government Licence (Updated 08 February 2017)
For example, to calculate the business rates for a property in Birmingham with the rateable value of £16,000:
| Business rates (before any reliefs) | = | Rateable value | x | Multiplier | = | |
| = | £16,000 | x | 48.4p (0.484) | = | £7,744.00 |
The VOA revises its valuations every five years, in order to maintain fairness and to ensure that rateable values reflect changes in the property market. The most recent revaluation was carried out in April 2010. At revaluation, the multipliers are revised so that the overall national business rates bill only changes in line with inflation.
If you are responsible for business rates on a property, which has a rateable value of less than £18,000 a year (or £25,500 in Greater London), you may be able to pay lower business rates under small business rates relief.
Up until April 2016, if you are occupying a property with a rateable value of £6,000 or less, you will be eligible for small business rate relief at 100 per cent, which means no business rates will be payable. If your rateable value is between £6,001 and £11,999, the business rates will be reduced on a sliding scale – from 100% at the bottom of the range to zero % at the top. If your rateable value is between £12,000 and £17,999 (£25,499 in London), the small business rate multiplier is applied when calculating business rates.
(Updated 08 February 2017)
The intention of this relief is to lessen the impact of any considerable changes in the rateable value, whether increased or decreased.
Transitional relief is automatically applied by your local authority when your business rates are calculated, providing you are entitled to it.
This transitional relief scheme ended on 31 March 2015.
The rural rate relief was introduced to help protect the retail outlets and similar services in rural settlements with a population of less than 3,000. Under the scheme, the following businesses in designated rural settlements are entitled to 50% mandatory rate relief:
Local authorities have a discretionary power to top up the mandatory relief to 100 per cent. They can also, if they wish, provide discretionary relief up to 100 per cent to other rural retail facilities, providing the rateable value is below £16,500.
Certain types of commercial property are exempt from business rates, including:
You will not be liable for business rates on an empty commercial property for the first three months after it becomes unoccupied. After the end of this three-month period, you will be required to pay the full business rates.
There are further exemptions for certain types of property:
*Contains public sector information licensed under the Open Government Licence (Updated 08 February 2017)
Your surveyor will be able to ensure the fairness of your business rates. They may be able to challenge the assessment of a property and reduce the liability substantially.
