Business Rates in England: How They Work and How to Reduce Them

What are business rates?

Business rates (also known as non-domestic rates) are a tax charged on most non-residential properties in England. They apply to shops, offices, warehouses, factories, pubs, and many other premises used for business purposes.

Your bill is calculated by multiplying your property's rateable value (RV) — an estimate of its annual rental value set by the Valuation Office Agency (VOA) — by the Uniform Business Rate (UBR) multiplier, set annually by central government.

Formula: Business rates = Rateable Value × UBR multiplier

2024/25 multipliers

Example: A shop with a rateable value of £25,000 would pay £25,000 × 0.499 = £12,475 before any reliefs.

Small Business Rate Relief (SBRR)

SBRR is one of the most valuable reliefs available to small businesses:

• 100% relief (rates bill = £0) — if your rateable value is £12,000 or less and you occupy only one property in England
• Tapered relief — if your rateable value is between £12,001 and £15,000, relief reduces gradually from 100% to 0%
• Small business multiplier— automatically applied to properties with RV ≤ £51,000, even if you don't qualify for SBRR
• Multiple properties — if you occupy more than one property, you may still get SBRR on your main property if the others each have a RV under £2,900

SBRR is usually applied automatically by your local council. If you think it has been missed, contact them directly.

Retail, Hospitality and Leisure Relief (RHL Relief)

In 2024/25, qualifying retail, hospitality, and leisure businesses receive a 75% discount on their rates bill, capped at £110,000 per business. Eligible properties include:

• Shops, supermarkets, and market stalls
• Restaurants, cafes, bars, and pubs
• Hotels, B&Bs, and self-catering accommodation
• Cinemas, theatres, gyms, and leisure centres

The discount is applied by your local billing authority — you do not need to apply separately.

Other reliefs

• Rural business relief — 100% mandatory relief for sole businesses (post office, food shop, pub, petrol station) in rural settlements under 3,000 population; discretionary 100% for other rural businesses
• Charitable rate relief — 80% mandatory relief for registered charities; local councils can grant an additional 20% discretionary relief
• Enterprise zone relief — 100% rates relief for up to 5 years for new businesses in designated enterprise zones
• Empty property rates — properties vacant for 3 months (or 6 months for industrial/warehouse premises) pay no rates; after this, full rates apply unless an exemption applies
• Hardship relief — local councils have discretionary power to reduce rates if a business would otherwise close and this would harm the local community

How to challenge your rateable value

If you think your rateable value is too high, use the VOA's Check, Challenge, Appeal (CCA) process:

1. Check — Review your property details on the VOA website (gov.uk). Correct any factual errors (size, use, features). This is free and straightforward.
2. Challenge — If you dispute the rateable value, submit a formal challenge with supporting evidence (comparable properties, actual rental evidence). You have 4 months to request a review after submitting a check.
3. Appeal — If your challenge is unsuccessful, appeal to the independent Valuation Tribunal for England. You have 4 months from the challenge decision to appeal.

Grounds for challenge include: your RV is higher than comparable properties, the property details are wrong, or there has been a material change of circumstances (e.g. a new road cutting access).

Transitional relief

When business rates are revalued (most recently April 2023), significant changes in bills are phased in through transitional relief. This caps annual increases and decreases for a set number of years. If your rateable value increased substantially in 2023, you may benefit from capped increases. Conversely, if your RV fell, your savings may also be phased in.

Working from home and business rates

In most cases, working from home does not trigger a business rates liability. You are unlikely to be charged if:

• You use a room at home for occasional work
• The room is also used for personal purposes
• Customers do not regularly visit your home
• You do not employ staff who work from your home

Business rates may apply if a clearly defined part of your home is used exclusively for business and shows significant business use. Your local council VOA will assess the situation.

Tips for reducing your business rates bill

• Verify your rateable value — check the VOA website and compare with similar nearby properties. Errors are common.
• Apply for all applicable reliefs — SBRR is often not claimed; check with your council.
• Split assessments — if part of your premises is residential, request a split assessment to reduce the business portion.
• Notify the VOA of changes — if your property has been significantly altered, damaged, or partially vacated, the VOA may reduce your RV.
• Use a specialist — business rates consultants (often no-win-no-fee) can challenge your RV if there is a strong case. Ensure they are members of the RICS or IRRV.

Explore more Business Compass guides for UK tax and compliance advice.