Business Rates Explained: A Guide for Business Owners

Business rates can feel like one of those unavoidable but confusing parts of running a company. Whether you operate from a small high street shop or manage a large commercial property portfolio, understanding what you’re being charged, and why, can make a real difference to your bottom line. Yet, many business owners are left scratching their heads when faced with terms like rateable value, multiplier, and the appeals process.

In this guide, we’ll cut through the jargon and explain business rates in simple, practical terms. Whether you’re brand new to the subject or just need a refresher, we’ll help you get to grips with what you’re paying, how it’s calculated and what you can do if something doesn’t seem right.

What Are Business Rates?

Business rates are a type of tax that most businesses in England, Wales and Scotland pay on the buildings or land they use. If you operate from a commercial property, like a shop, office, warehouse, or even a holiday let, you’ll likely receive a business rates bill from your local council.

These rates are collected by local authorities and help fund essential public services in your area, such as street cleaning, policing and education. They’re a bit like council tax, but for non-residential properties.

Even if you rent rather than own your premises, you’re usually responsible for paying business rates. The amount you pay depends on your property’s rateable value, which is assessed by the Valuation Office Agency (VOA), and a government-set figure called the multiplier, but we’ll break those down in the next section.

Key Terms Explained

Business rates can seem complicated, but once you understand a few key terms, it all starts to make sense. Here’s a plain English breakdown of the most important ones:

Rateable Value (RV)

This is the estimated annual rent your property could fetch on the open market, as determined by the Valuation Office Agency (VOA), usually based on a set valuation date. It’s not the amount you pay, but it forms the foundation of your business rates bill.

For example, if your shop could be rented for £20,000 a year, that’s roughly what your rateable value might be.

Multiplier (Uniform Business Rate)

The multiplier is a pence-in-the-pound figure set by the government each year. It tells you how much to pay for every £1 of your property’s rateable value. There are two types:

1. The standard multiplier, for larger businesses.

2. The small business multiplier, for properties with a rateable value below a certain threshold.

For example, if your RV is £20,000 and the multiplier is 51.2p, your bill before any reliefs would be £20,000 × 0.512 = £10,240.

Business Rates Bill = Rateable Value × Multiplier

This simple formula gives you the baseline for your business rates before any discounts or reliefs are applied.

Reliefs and Exemptions

There are several schemes to reduce your business rates bill depending on your circumstances. These include:

• Small Business Rate Relief

• Charitable Rate Relief

• Rural Rate Relief

• Empty Property Relief

• And more…

Each has its own rules and qualifying criteria. Even if you think you’re not eligible, it’s worth checking! You could be missing out on significant savings.

The Appeals and Revaluation Process

Business rates aren’t set in stone, so if you think your property’s rateable value is too high, or if your circumstances have changed, you can challenge it. But first, it's helpful to understand how revaluations and appeals work.

Revaluations

The Valuation Office Agency (VOA) regularly reviews rateable values to reflect changes in the property market. These revaluations are set to happen every three years, with the latest one taking effect in 2023. The goal is to ensure that business rates are based on up-to-date rental values, so your bill reflects what your property might actually rent for today.

Check, Challenge, Appeal

If you think your rateable value is incorrect, you can go through the official appeals process known as Check, Challenge, Appeal:

Check: At this stage you can confirm or dispute the basic details of the property for example its size and use.

Challenge: If there are still disagreements with the valuation following the Check, or the dispute is for a more complex reason then you can Challenge the outcome of the Check.

Appeal: If you’re still not happy with the VOA’s response, you can escalate the case to the Valuation Tribunal.

Many businesses never challenge their assessments even when they’re overpaying. The process can seem daunting, but with the right guidance, it’s much more manageable.

Why It Matters: Risks of Getting It Wrong

Understanding your business rates isn’t just about ticking a box, it can have a real impact on your cash flow. Many businesses end up paying more than they should, simply because they don’t realise they’re eligible for reliefs, or because their rateable value doesn’t reflect current conditions.

Here are a few common pitfalls:

• Overpaying due to outdated or incorrect property details.

• Missing out on reliefs, such as Small Business Rate Relief or Rural Relief, because you didn’t know you qualified.

• Paying full rates on areas of your building that are empty, under refurbishment, or unusable, when in fact, exemptions may apply.

For example, if part of your premises is temporarily out of use due to renovation, you might be able to claim temporary relief. But if you don’t know the rules, you could end up footing the full bill anyway.

Being proactive about your business rates could save your business thousands each year. It pays to seek expert advice.

When to Get Help

If your business rates bill seems high, your property details have changed, or you simply don’t have time to navigate the system, it’s worth speaking to a business rates consultant. An expert can identify savings, handle appeals, and ensure you’re not paying a penny more than necessary.

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Business rates don’t have to be a mystery. With a clear understanding and the right support, you can take control of your costs. If you'd like a free, no-obligation review of your rates, the team at Holloway Bond is here to help. Drop us a message!