Business rates are a tax on properties used for business. They help pay for your local council's services, such as the fire brigade and police, so we're all in favour! But knowing how much you can expect to pay can be complicated. Discover what business rates are, who's responsible for paying them, and how to calculate them below.
What are business rates?
Business rates are charged on non-domestic properties, such as shops, offices, warehouses, factories and holiday rentals.
If you use a building - or part of a building for non-domestic purposes - you will probably be liable for business rates.
Who is responsible for paying business rates?
The occupier of the property is usually the one responsible for paying business rates, and the one who the bill will be addressed to.
If you rent your business premises, your rent may include business rates. Your landlord will then be responsible for passing on the rates money to your local authority. Check with your landlord whether or not this is the case.
If you're starting a new business, it's your sole responsibility for notifying the council when you move into new business premises - or when you start trading.
When are business rates charged?
Your bill usually comes in either February or March.
Most councils ask business owners to pay in ten equal monthly instalments and each bill will indicate when the next is due.
If you miss a payment, you'll receive a reminder giving you seven days to pay. Failing that, if you miss that deadline, you are liable to pay the whole outstanding balance for the rest of the year.
If you're struggling to pay, contact your local council - they may show leniency if you explain the situation and provide notice.
How are business rates calculated?
Your business rates bill will tell you exactly how much you need to pay and when, so your local authority will have done all the calculations for you, but it's worth knowing how to do it yourself too.
Your business rates are worked out by multiplying the rateable value of your property by a multiplier.
Your rateable value is decided by the Valuation Office Agency (VOA). You can find out your rateable value by putting your postcode into the VOA's rating list. The rating list is currently based on an estimate of the open market rental value of your property in April 2015.
There are two multipliers, depending on the rateable value of your business.
- Rateable value below £51,000 = small business multiplier = 49.1p (2019-2020)
- Rateable value of £51,000 or more = standard multiplier = 50.4p (2019-2020)
Do the maths
Multiply your rateable value by your multiplier. This shows how much you will have to pay in business rates (before any relief is deducted).
What is business rates relief?
Some properties are eligible for discounts from their council on their business rates. Small business rate relief is probably the best known programme. However, there is also relief for rural properties, charities, enterprise zones and more. Discover the different business rate relief programmes on the Gov.uk website.
Can I get small business rate relief?
You can get small business rate relief if:
- your property’s rateable value is less than £15,000
- your business only uses one property - you may still be able to get relief if you use more
For properties of an estimated rateable value below £12,000, you do not have to pay business rates.
For properties with a rateable value between £12,001 and £15,000 the rate of relief gradually decreases from 100% to 0%. For example, if your property is valued at £13,500 you'll get 50% off business rates and if it is valued at £14,000, you will only get 33% off - and so on.
I work from home - do I need to pay business rates?
If a part of your home is used solely for business purposes - a room that's a workshop or studio, for example - you may be liable for business rates on that part of the property. Get in touch with your local council to check.
I run a B&B that I also live in - do I need to pay business rates?
You may well need to pay business rates on at least part of your property. Get in touch with your local council to check.
My property is empty - do I need to pay business rates?
If your property is empty, you are exempt from business rate if your rateable value is less than £12,000 (as of 20018/19). If it's more, you'll need to pay.
Do empty properties qualify for small business rate relief?
What happens if my rateable value increases to more than £12,000 after I've been given small business rate relief?
Your eligibility for SBRR will stop as soon as the rateable value goes over the threshold.
Am I still eligible for small business rate relief if I have two separate businesses?
That will depend on your individual case, so you need to discuss your circumstances with your council.
What do I do if I think my business rates bill is wrong?
You need to contact your local council and explain what you think is wrong. But you still need to carry on making your due payments until the council tells you otherwise. Find out how to check and challenge your business rates bill.
What do I do if I can't afford my bill?
Contact your local council immediately. They may be able to change the dates and amounts you owe.
What other taxes do businesses have to pay?
It depends on your business structure.
You may also have to pay VAT, depending on how much money your business makes.