Calculating your business rates

Business rates

Business Rates

Business rates - also known as national non-domestic rates - are a tax on properties used for business. They help pay for your borough's services, such as the fire brigade and police.

Who pays 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 is then responsible for passing on the rates money to your local authority. Check with your landlord whether or not this is the case.
  • You are responsible for notifying the council when your move into new business premises or when you start a new business.

How to pay business rates

  • Your bill usually comes in March or April.
  • Most councils ask you to pay in ten equal monthly instalments: the bill will indicate when each is due.
  • If you miss a payment, you get a reminder giving you seven days to pay. If you miss that deadline, you're liable to pay the whole outstanding balance for the rest of the year. If you're struggling to pay, contact your council - they will usually show leniency if you explain the situation and give them notice.

How business rates are 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 in case:

  • You want to check whether you're paying the right amount.
  • You want to plan your financial year ahead in a new property whose business rates you don't yet know.
  • You want to find out what the business rates are for a property you're thinking of moving your business into (although the landlord may be able to tell you this).

The local council works out your business rates by multiplying the rateable value of your property by a multiplier (also known as 'poundage').

  • Your property's rateable value is calculated by the government's Valuation Office Agency (VOA) - it's the amount the VOA values your property at for tax purposes.
  • You can find out your rateable value by putting your post code into the VOA's rating list.
  • The rating list is updated every five years - the last one was put together in 2015. So your property's rateable value may change in 2020.
  • The multiplier is set by the government every April 1.
  • If you qualify for small business rate relief (see below), the multiplier for 2018/19 has been set at 48p for each pound.
  • For all other properties, the standard multiplier has been set at 49.3p per pound for the 2018/19 period.

Small business rate relief

  • If your rateable value is less than £51,000, you qualify for small business relief rate (SBRR) - providing you only occupy one business property in the UK.
  • You need to apply to your local authority for SBRR.
  • Your application lasts as long as the current rating list (until April 1 2020). When the new rating list is drawn up, you need to reapply. (Your application will then last five years until the next rating list is drawn up in 2025).
  • You can apply for the relief immediately (you used to have to wait until the end of the financial year if you were new to the property).
  • 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. 

FAQ

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?
No.

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.

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.

Jargon Buster:

Rateable value: the amount your property is valued at for tax purposes, as decided by the Valuation Office Agency and as listed in the VOA rating lists.

Multiplier, also known as 'poundage' and 'uniform business rate' (UBR): The amount you multiply your rateable value by to calculate how much you owe in business rates per year. It is decided every April 1.

Resources

  • Valuation Office Agency helpline: 0845 602 1507

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