Pillar Guide · Updated May 2026
UK Business Rates Explained 2026/27: Rateable Value × Multiplier 49.9p, Small Business Relief 100%, Retail Hospitality Leisure 40% Discount and How to Appeal
Business rates (non-domestic rates) are a tax on commercial property in the UK, calculated as the property'srateable value multiplied by the government-setmultiplier. For 2025/26 in England, the standard multiplier is 54.6p and the small business multiplier is 49.9p. Properties with a rateable value up to £12,000 can claim 100% Small Business Rate Relief (zero business rates). Retail, hospitality and leisure properties receive a 40% discount capped at £110,000 per business. The Valuation Office Agency completed a major revaluation in April 2023 (based on April 2021 rental values), with transitional arrangements ending in April 2026. This guide explains how rates are calculated, every major relief available, empty property rules, how to challenge your rateable value through the Check Challenge Appeal process, and the different rules in Scotland, Wales, and Northern Ireland for 2026/27.
What Are Business Rates?
Business rates are a property tax paid by occupiers of non-domestic (commercial) buildings in the UK. They are administered by local councils (billing authorities) in England, with receipts flowing partly to local government and partly to central government (pooled rates system).
Almost all commercial property occupiers pay business rates: shops, offices, factories, warehouses, hotels, restaurants, schools, hospitals, and many more. Some properties are exempt by statute (agricultural land, fish farms, public parks, churches, some charities). Sole traders working from home pay council tax (domestic rates) on their home, not business rates.
How to Calculate Your Business Rates Bill
The formula: Rateable Value × Multiplier = annual business rates before reliefs.
England multipliers 2025/26
| Multiplier | Rate (pence in the pound) | Applies to |
|---|---|---|
| Standard | 54.6p | Properties with RV ≥ £51,000 |
| Small business | 49.9p | Properties with RV < £51,000 |
Worked example — before reliefs
- Property: small retail shop in a market town
- Rateable Value: £18,000
- Multiplier: 49.9p (small business rate)
- Annual rates: £18,000 × 0.499 = £8,982/year
- After 40% RHL discount (retail property): £8,982 × 60% = £5,389/year
- Note: RV £18,000 does not qualify for SBRR (above £15,000 threshold)
Small Business Rate Relief (SBRR) — The Key Relief
SBRR is the most important relief for small businesses. In England for 2025/26:
- RV up to £12,000: 100% relief — zero business rates payable
- RV £12,001–£15,000: tapered relief from 100% down to 0%
- RV over £15,000: no SBRR (standard rate applies)
Tapered relief formula: (£15,000 − RV) ÷ £3,000
SBRR taper examples
| Rateable Value | SBRR relief | Net rates/yr |
|---|---|---|
| £8,000 | 100% | £0 |
| £12,000 | 100% | £0 |
| £13,000 | 66.7% | £2,163 |
| £14,000 | 33.3% | £4,659 |
| £15,000 | 0% | £7,485 |
| £20,000 | 0% | £9,980 |
Net rates uses small business multiplier 49.9p, before RHL or other reliefs.
SBRR is not automatic — you must apply
Apply to your local council (billing authority). Most councils have an online form. The relief continues annually once granted unless your circumstances change (e.g., you take on additional properties).
Retail, Hospitality and Leisure (RHL) Relief
For 2025/26, qualifying retail, hospitality and leisure properties receive a 40% discount on their business rates bill, capped at £110,000 per business (across all properties).
Qualifying property uses include: shops, restaurants, cafés, bars, pubs, hotels, B&Bs, gyms, sports centres, music venues, cinemas, theatres. Office use, financial services, and logistics/warehousing do NOT qualify.
The cap means large multi-site businesses (e.g., national pub chains) cannot claim unlimited relief. Smaller operators (typically under ~7 sites at average RV) are unaffected by the cap.
Other Mandatory and Discretionary Reliefs
Mandatory reliefs
- Charities: 80% mandatory relief on properties wholly or mainly used for charitable purposes. Councils may grant an additional 20% discretionary relief (giving 100% relief).
- Community amateur sports clubs (CASCs): 80% mandatory relief.
- Rural rate relief: 50% mandatory relief on rural properties in rural settlement areas (population under 3,000). The sole village shop, post office, pub, or petrol station in a rural settlement.
- Transitional relief: phases in large increases from the 2023 revaluation over multiple years (ending April 2026).
Discretionary reliefs (council grants)
- Additional charity relief (up to 100% total)
- Hardship relief (exceptional financial hardship)
- Local newspaper relief (£1,500/year, qualifying newspapers)
- Pub relief (£1,000, qualifying premises — 2025/26 scheme)
Empty Property Business Rates
Empty property rates are one of the most significant property costs for landlords and businesses temporarily vacating premises.
- Industrial property (factories, warehouses): 6-month empty rates exemption, then 100% rates
- Other commercial property: 3-month empty rates exemption, then 100% rates
- Listed buildings and properties with RV under £2,900: indefinite exemption
After the exempt period, full business rates apply on the empty property — at the standard multiplier (not small business). This can make vacant commercial property extremely expensive to hold.
Rateable Value — How the VOA Sets It
The Valuation Office Agency (VOA) assesses rateable values for all commercial properties in England and Wales. The rateable value is an estimate of the annual rent the property could command on the open market at the relevant valuation date, assuming:
- The tenant pays all outgoings (tenant's repairing lease)
- The property is in reasonable repair
- The valuation date for the current 2023 List is 1 April 2021
From April 2026, the government has announced annual revaluations (replacing the previous multi-year cycles), which should keep rateable values closer to market rents going forward.
How to Appeal Your Rateable Value (Check Challenge Appeal)
The Check, Challenge, Appeal (CCA) process for England:
- Register on the VOA portal (voa.service.gov.uk) and claim your property
- CHECK: verify factual details (floor area, use class, condition). Submit corrections if wrong. VOA has 12 months to respond.
- CHALLENGE: if you dispute the valuation itself, submit evidence of comparable rental transactions at the April 2021 date in the local area. VOA has 18 months to respond. This stage is technical — professional advice from a RICS rating surveyor is recommended for significant properties.
- APPEAL: if dissatisfied with the Challenge outcome, appeal to the Valuation Tribunal for England (VTE). Tribunal hearings present evidence from both sides.
Common mistake: not paying rates during appeal
You must continue paying business rates during the appeal process. Non-payment is a separate legal issue. If successful on appeal, you receive a backdated credit or refund. Do not withhold payment pending outcome.
Scotland, Wales and Northern Ireland
Business rates are devolved. Each nation has its own multiplier, reliefs and appeal routes:
- Scotland: Small Business Bonus Scheme — 100% relief up to RV £12,000; 25% relief £12k-£35k. Multiplier ≈49.8p (2025/26). Apply to your local Scottish council.
- Wales: Small Business Rates Relief — 100% up to RV £6,000; 50% for £6,001-£12,000; tapered £12,001-£15,000. Welsh multiplier ≈56.2p (2025/26). Apply to your Welsh local authority.
- Northern Ireland: Non-domestic rates based on Net Annual Value (NAV). Assessed by Land & Property Services (LPS). Different calculation methodology. Apply via LPS for reliefs.