Business rates can feel like an extra burden for owners and managers who already have plenty on their plates. These charges are set by local authorities in England, Scotland, Wales and Northern Ireland, and they help fund local services. In this blog, we’ll explain what business rates are, how they’re calculated, who pays them and how you can work on reducing business rates for your organisation.

What are business rates?

Business rates are a tax on most non-domestic properties, including offices, shops and warehouses. The idea is similar to council tax on residential properties. Local authorities collect the money, which is then used for a range of public services in the area.

In many cases, rates apply to property owners and tenants. If you occupy a commercial property (or part of one), you’re usually liable. Some organisations, such as places of worship and certain agricultural buildings, do not pay business rates at all. In the 2024/25 period, reliefs and exemptions remain an important consideration, especially for small businesses and charities.

How are business rates calculated?

Each property has what’s known as a “rateable value”. The Valuation Office Agency (VOA) in England and Wales (or the equivalent bodies in Scotland and Northern Ireland) estimates the annual rent the property would fetch if it were leased on the open market. This estimate is your rateable value.

Local authorities then apply a multiplier (pence in the pound). For 2024/25, the government has indicated that it will keep the multiplier close to the 2023/24 level. That means you can expect a small business multiplier in England around 49.9p and a standard multiplier near 51.2p, although these figures may vary slightly by region. Your annual business rates bill is the rateable value multiplied by the appropriate rate in the pound.

Differences across the UK

In Scotland, Wales, and Northern Ireland, authorities set their own multipliers. If you operate across more than one nation, you’ll need to check the official figures for each region. The general principle remains the same, but some relief schemes can differ.

Who pays business rates?

Property owners, leaseholders or occupiers typically pay business rates. If you rent space from a landlord, your lease should clarify whether the landlord or you as the tenant are responsible. Most small or medium-sized businesses find that the obligation sits with the organisation using the space.

If your property is empty, you might still need to pay rates after an initial free period (usually three months). Certain types of empty properties are exempt for longer, such as listed buildings. If you have a listed property or a building scheduled for refurbishment, it’s best to check if you qualify for an exemption.

Ways to reduce your business rates

Many businesses assume that rates are set in stone, but that isn’t always the case. If you’re looking at reducing business rates for your property, here are practical steps you can consider.

1. Check available reliefs

Relief schemes exist to help businesses pay less. The most common is small business rate relief (SBRR) in England, which applies if you only use one property and its rateable value is below a certain threshold. For 2024/25, the thresholds remain in line with the previous year, so if your property’s rateable value is £12,000 or less in England, you shouldn’t have to pay business rates at all, and there are tapered reliefs for properties worth up to £15,000. Wales, Scotland and Northern Ireland have their own versions of small business relief, though the thresholds can differ.

Other reliefs

• Rural rate relief: For qualifying properties in designated rural areas.
• Charitable rate relief: For registered charities, usually offering a significant discount on business rates.
• Transitional relief: In place to help those facing large changes in their bill following a rates revaluation.

To make the most of these, you’ll need to apply through your local council. Keep track of any changes in your property use or size, as that might affect your eligibility.

2. Appeal your rateable value

If you believe your rateable value is too high, you can appeal. You’ll need evidence that your property’s rental value is below the figure set by the VOA (or the local equivalent in Scotland or Northern Ireland). This could include comparing rents of similar properties nearby or highlighting any changes in your property that make it less valuable.

Appeals can take time and there’s a clear process you must follow. If you’re appealing in England, the system is “check, challenge, appeal.” The steps include checking your facts, challenging the valuation and finally submitting an appeal if you’re still unhappy with the outcome. Other parts of the UK have similar processes.

3. Restructure or split premises

If you occupy a large space, you might find it more efficient to split the property into smaller units. Splitting could lead to separate rateable values for each section. This isn’t always practical, but if you’re considering a reconfiguration or you don’t need all of your current space, it can reduce your total rates bill – especially if each unit can qualify for small business rate relief.

Before you proceed, it’s sensible to consider the cost of conversion and any potential disruption to your operations. Restructuring could also affect your insurance and lease agreements. Speak with your landlord if you’re on a lease, as any building changes typically need approval.

4. Make use of temporary exemptions

Some short-term exemptions may apply if you undergo structural work or your property is unoccupied for refurbishment. The standard empty property exemption often covers three months, but industrial premises sometimes receive six. If you’re planning a refurbishment that will require the space to be out of use, check with your local authority to see if you can claim this exemption.

5. Seek professional guidance

Although you can carry out a lot of checks yourself, we find that a professional review can be worthwhile. Our team has seen many cases where a business was paying more than it needed to, simply because it missed a relief or accepted an incorrect valuation.

If your property has changed in size or purpose, a professional valuation can clarify whether your current rateable value is accurate. We’re also happy to handle the administrative side, including compiling evidence for an appeal.

Staying on top of changes

It’s worth reviewing your business rates annually, or whenever you make changes to your property. Relief eligibility can change if you add a new unit or repurpose your property for a different activity. Rateable values can also be re-examined, especially if there’s a large shift in the rental market in your area.

Staying informed means you won’t miss out on reductions that could make a difference to your budget. According to the Local Government Association, businesses in England paid around £25bn in business rates in 2022/23. This figure shows how significant rates are as a revenue source for councils, but it also highlights how much businesses could save if they use the reliefs available.

How we can help

At HW Associates, we stay updated on all aspects of the current tax year. Our accountants and business advisers work with a range of small or medium-sized enterprises (SMEs) to ensure they’re paying the correct amount, applying for relevant reliefs and appealing where necessary.

If you have any questions about reducing business rates, please contact us. We’re here to help you find ways to manage costs so you can put resources where they matter most – growing your business.