What Are Business Rates? A Guide for Small Businesses
Business rates are a tax on properties used for business purposes, and they’re set to rise considerably in 2025 for many small companies.
If you run your business from a commercial property (or, in some cases, from home), it’s crucial to understand business rates and how much you need to pay.
What Are Business Rates?
Business rates are local taxes that help fund public services. The government levies these taxes on non-domestic properties such as offices, shops, pubs, and warehouses. If only part of a building is used for commercial purposes, business rates may still apply.
How Are Business Rates Calculated?
Business rates are determined by a property’s ‘rateable value,’ which reflects its estimated open market value. The most recent revaluation took effect on 1 April 2023, based on values as of 1 April 2021. Revaluations, conducted by the Valuation Office Agency (VOA), typically occur every five years.
How Much Are Business Rates?
You can estimate your business rates by multiplying your property’s rateable value by the relevant multiplier, then subtracting any applicable reliefs:
| Year | Standard Multiplier* | Small Business Multiplier* |
| 2025-2026 | 55.5p | 49.9p |
| 2024-2025 | 54.6p | 49.9p |
| 2023-2024 | 51.2p | 49.9p |
| 2022-2023 | 51.2p | 49.9p |
Businesses with premises valued above £51,000 pay the standard multiplier, while those below this threshold pay the small business multiplier. The government has frozen the small business multiplier at 49.9p to support smaller companies.
*These rates apply to properties in England.
Small Business Rate Relief
Small businesses with properties valued below £15,000 may qualify for rate relief:
- Properties valued at £12,000 or less receive full relief.
- For properties valued between £12,001 and £15,000, relief gradually decreases from 100% to 0%.
Even if you don’t qualify for full relief, properties under £51,000 benefit from the lower small business multiplier.
Business Rates Relief for Retail, Hospitality, and Leisure Businesses
For 2025-26, business rates relief for retail, hospitality, and leisure businesses will drop from 75% to 40%.
According to commercial real estate intelligence firm Altus Group:
- The average shop’s business rates bill will increase from £3,589 to £14,599.
- The average pub will see an increase of £3,938 to £16,020.
Business rates relief is capped at £110,000 per business. To claim relief, contact your local authority.
Government Plans for Business Rates
The government plans to permanently reduce business rates for retail, hospitality, and leisure properties with a rateable value under £500,000 from April 2026. However, properties valued over £500,000 will be subject to a higher multiplier to offset these reductions. The exact reduction for SMEs is yet to be announced.
How to Calculate Your Business Rates – An Example
If your business premises have a rateable value of £21,000, using the small business multiplier (49.9p), your business rates would be £10,479. If your property is valued below £15,000, you may be eligible for small business rates relief.
Business Rates and Working from Home
You generally won’t have to pay business rates if you use a small part of your home for work. However, business rates may apply if:
- Your property is divided into domestic and business areas.
- You sell goods from your home to visiting customers.
- You employ staff at your property.
- You’ve made modifications to accommodate your business, such as converting a garage.
If unsure, contact the VOA.
The Importance of an Amazing Website for Small Businesses
With rising business rates and increasing operational costs, small businesses need to find ways to stay competitive and attract more customers. One of the most effective ways to do this is by having an outstanding website.
Here’s why every small business needs an amazing website:
- 97% of consumers search online for local businesses before making a purchase decision (BrightLocal).
- 75% of people judge a business’s credibility based on its website (Stanford University).
- Businesses with a strong online presence generate 126% more leads than those without one (HubSpot).
A well-designed, professional website helps you establish trust, reach more customers, and ultimately increase revenue—helping you counteract the rising costs of doing business. Whether you need a website refresh or a brand-new site, investing in a great online presence is no longer optional—it’s a necessity.