What are Business Rates?

Business rates, also known as non-domestic rates, are a property tax charged on most premises used for business or other non-domestic purposes in England. They commonly apply to shops, offices, pubs, cafés, warehouses, factories, holiday rental properties and guest houses.

You may also have to pay business rates when only part of a property is used for business purposes. Local councils calculate and collect the bill, while the Valuation Office determines the property’s rateable value. Business rates paid wholly for business purposes are normally deductible when calculating taxable business profits

Last Updated: 26.08.2026

What Factors Go Into Determining Business Rates?

Business rates are primarily based on a property’s rateable value, which represents an estimate of its annual open-market rental value on a specified valuation date. The Valuation Office Agency (VOA) is responsible for assessing rateable values for non-domestic properties in England and Wales.

A major revaluation came into effect on 1 April 2026. The current rateable values in England are generally based on estimated rental values as at 1 April 2024. Revaluations now take place every three years so that valuations better reflect changes in the commercial property market.

Factors such as the property’s location, size, use, layout and rental evidence from comparable premises can influence its rateable value. Your rateable value is not the same as your actual rent or the final amount of business rates you will pay.

How Are Business Rates Calculated in 2026?

Your local council normally calculates the basic business rates liability by multiplying your property’s rateable value by the applicable business rates multiplier, before applying any discounts, exemptions or reliefs.

From 1 April 2026 to 31 March 2027, England uses five main multipliers:

For example, a non-retail, hospitality or leisure property with a £15,000 rateable value would have a basic liability of:

£15,000 × 0.432 = £6,480

However, this is not necessarily the final bill because business rates relief, transitional arrangements and other adjustments may apply.

A temporary 1p transitional relief supplement also applies during 2026/27 to certain ratepayers who do not receive Transitional Relief or Supporting Small Business Relief.

The new lower Retail, Hospitality and Leisure multipliers replaced the previous temporary Retail, Hospitality and Leisure Relief approach from April 2026.

Empty Properties and Business Rates

If a business property becomes empty, you can normally receive 100% empty property relief for the first three months. After that period, most properties become liable for full business rates again.

Industrial premises, including qualifying warehouses and factories, normally receive relief for six months in total, rather than three months.

Some empty properties can remain exempt for longer, including:

• Listed Buildings Until they are occupied again
• Properties With A Rateable Value Below £2,900 Until they are occupied again
• Charity-Owned Properties Where their next use will mainly be for charitable purposes
• Community Amateur Sports Club Properties Where their next use will mainly be as a sports club

Businesses should inform their local council when a property becomes vacant and confirm whether extended empty-property relief applies.

Work at Home and Business Rate

As a general rule, if you only use a limited portion of your home for commercial purposes, you won’t have to pay business prices. If you’re a freelancer who works from home, for example, you don’t have to pay. You would, however, be forced to pay business rates under some cases.

If the land is divided into residential and commercial sections, you’ll have to pay business rates for the portions that aren’t used for residential purposes.

If you own a corner store and live above it, for example, you’ll have to pay business taxes on the shop portion of the land because it’s different from your living quarters.

You’ll still have to pay business taxes if you sell items to people who come to the building. You might, for example, run a company out of your garage and market goods directly to customers.

Employing other people to work at your home is one factor that may mean business rates become payable. Business rates may also apply if customers regularly visit, the property is divided between business and domestic use, or you have physically altered part of the home specifically for business purposes.

How Can You Check or Challenge Your Business Rates?

You can check your property’s current rateable value through the Valuation Office’s business rates services. A business rates valuation account allows you to see more detailed information, check how the valuation was calculated, compare it with similar properties and report incorrect property details.

If you believe the rateable value is wrong, you normally need to submit a check case first. Once the Valuation Office has made its check decision, you can usually challenge that decision within four months. A challenge may also be possible if no check decision has been made after 12 months.

The current rating list took effect on 1 April 2026, so businesses should make sure they are reviewing their current 2026 valuation rather than relying on information from the previous rating list.

What Business Rates Relief Is Available in 2026?

Businesses may qualify for several types of business rates relief depending on their property, rateable value and circumstances.

Small Business Rate Relief remains particularly important. If your business uses only one property with a rateable value of £12,000 or less, you can normally receive 100% relief and pay no business rates.

For properties with rateable values between £12,001 and £15,000, the relief gradually reduces from 100% to zero.

From April 2026, eligible retail, hospitality and leisure properties below £500,000 benefit from permanently lower multipliers rather than the previous annual Retail, Hospitality and Leisure Relief system.

Businesses affected by large bill increases following the 2026 revaluation may also qualify for Transitional Relief or Supporting Small Business Relief.

Other reliefs may be available for charities, rural businesses and certain other properties. Temporary reductions may also be possible where significant local disruption, such as flooding, building works or roadworks, materially affects a property’s value.

What is the purpose of your market rates?

Your company rates help to finance a variety of programmes all over the world. A part of your business rates goes to the city council, which uses it to help finance programmes like keeping the streets clean, dry, and well-lit at night, as well as improvements to public spaces like local parks and civic amenities.

Some of the funds go to the Greater London Authority, which uses them to finance other vital agencies including the police and fire departments. Any of the corporate taxes are also paid to the government at large.

Conclusion

Business rates remain an important property cost for UK businesses, but the amount payable can vary considerably depending on the property’s rateable value, use and eligibility for relief.

The 2026 revaluation and introduction of five business rates multipliers in England mean businesses should not rely on older calculations when estimating their current liability.

Check the rateable value shown for your premises, review your latest council bill and make sure any available Small Business Rate Relief, Transitional Relief or other qualifying relief has been applied.

Businesses that believe their 2026 valuation is incorrect can use their business rates valuation account to request changes and, where appropriate, challenge the valuation.

FAQs

1. What are business rates?

Business rates are a tax on most properties used for non-domestic purposes, including shops, offices, warehouses, pubs and factories. They are calculated and collected by local councils.

2. What are the business rates multipliers for 2026/27?

England has five main multipliers for 2026/27, ranging from 38.2p for qualifying small RHL properties to 50.8p for properties with rateable values of £500,000 or more.

3. When did the latest business rates revaluation happen?

The latest revaluation took effect on 1 April 2026. Current rateable values are generally based on estimated open-market rental values as at 1 April 2024.

4. Do small businesses have to pay business rates?

A qualifying business using one property with a rateable value of £12,000 or less can normally receive 100% Small Business Rate Relief. Relief tapers for rateable values between £12,001 and £15,000.

5. Do you pay business rates on an empty property?

Normally not for the first three months. Qualifying industrial properties receive six months, while listed buildings and some other qualifying properties can remain exempt for longer.

6. Do I pay business rates if I work from home?

Usually not if you only use a small part of your home as an office. Rates may apply where customers visit, employees work there or part of the property has been specifically converted for business use.

7. Can I challenge my 2026 rateable value?

Yes. You can use a business rates valuation account to check your property information and start the formal check and challenge process if you believe the current valuation is incorrect.