Business Rates Guide UK Small Business: Everything You Need to Know
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Introduction
If you run a business from commercial premises — a shop, office, workshop, café, or warehouse — you’ll almost certainly have to pay business rates. They’re one of the larger fixed costs many small businesses face, and 2026 has brought some of the biggest changes to the system in years, including a revaluation of every commercial property and a brand-new multiplier structure.
This guide explains, in plain English, how business rates work for UK small businesses in 2026: how your bill is calculated, the important 2026 changes, the reliefs that could reduce (or eliminate) what you pay, and how to check or challenge your bill. It’s a practical guide for business owners, not a technical manual.
One important note first: business rates are devolved. The rules, multipliers, and reliefs below apply to England. Scotland, Wales, and Northern Ireland run their own business rates systems with different rates and reliefs, so if your premises are outside England, check your own nation’s guidance.
What Are Business Rates?
Business rates (formally “non-domestic rates”) are a tax on most non-domestic properties used for business purposes. They’re the commercial equivalent of Council Tax, and they’re collected by your local council — though, unlike most taxes you’ll deal with, they’re administered by councils and the Valuation Office Agency rather than HMRC.
You’ll usually have to pay business rates if you occupy premises such as:
- Shops and retail units
- Offices
- Pubs, cafés, and restaurants
- Warehouses and factories
- Holiday lets and guest houses (in many cases)
Some properties are exempt, and if you work from home you generally won’t pay business rates unless part of your home is used exclusively for business (and even then, often not).
How Business Rates Are Calculated
Your business rates bill is worked out with a simple formula:
Rateable Value × the multiplier = your annual business rates (before any reliefs)
There are two moving parts:
- Rateable Value (RV) — an estimate of your property’s annual open-market rental value, set by the Valuation Office Agency (VOA).
- The multiplier (sometimes called the “poundage”) — a figure in pence set by the government, which you multiply the RV by.
So a property with a rateable value of £20,000, at a multiplier of 43.2p, would have a bill of £8,640 before any reliefs — and reliefs can reduce that substantially, sometimes to zero.
The Big 2026 Changes
Two major things happened on 1 April 2026, and together they mean many businesses saw their bills change — sometimes for more than one reason.
1. The 2026 revaluation
The VOA revalues all business properties in England and Wales roughly every three years. The 2026 revaluation took effect on 1 April 2026, and it’s based on rental values as at 1 April 2024. The previous rating list was based on April 2021 values, which in many sectors were depressed by the pandemic — so for a lot of properties, the new rateable values are higher, reflecting the recovery in rents since then.
The key takeaway: your rateable value may well have changed, so it’s worth checking your new figure rather than assuming your bill is the same as before.
2. A new five-multiplier system
Until 31 March 2026, England used a simple two-multiplier system (a small business multiplier and a standard multiplier). From 1 April 2026, that was replaced with five multipliers, which vary depending on both what your property is used for (whether it’s retail, hospitality, or leisure) and its rateable value.
The multipliers for 2026/27 in England (in pence per pound of rateable value) are:
| Category | Rateable value | Multiplier |
|---|---|---|
| Small Business RHL (retail, hospitality, leisure) | Under £51,000 | 38.2p |
| Small Business (non-RHL) | Under £51,000 | 43.2p |
| Standard RHL | £51,000–£499,999 | 43.0p |
| Standard (non-RHL) | £51,000–£499,999 | 48.0p |
| Large (all properties) | £500,000 and above | 50.8p |
The lower “RHL” multipliers apply to properties occupied and mainly used for retail, hospitality, or leisure. The higher 50.8p multiplier on the largest properties (RV £500,000+) helps fund the lower rates for smaller RHL premises.
What happened to the 40% retail relief?
For 2024/25 and 2025/26, retail, hospitality, and leisure businesses got a 40% discount on their bills (capped at £110,000 per business). That relief ended on 31 March 2026 and has been replaced by the permanently lower RHL multipliers above.
Here’s the catch worth understanding: the lower RHL multipliers are welcome, but they don’t necessarily mean a lower bill. With the 40% relief gone and rateable values often higher after the revaluation, some retail and hospitality businesses are actually paying more in 2026/27 than the year before. If you run an RHL property, it’s genuinely worth checking your new bill line by line.
Small Business Rate Relief (SBRR)
This is the relief most small businesses care about, and it can wipe out your bill entirely.
- Rateable value up to £12,000: you get 100% relief — you pay nothing.
- Rateable value £12,001 to £15,000: you get tapered relief, gradually reducing from 100% to 0% as the RV rises through the band.
- Rateable value up to £51,000: even if you don’t qualify for the discount above, your bill is calculated using the lower small business multiplier.
To qualify, you generally need to occupy only one business property (there’s some allowance for a second small property). If you take on a second property, a grace period applies before you lose the relief — and for 2026 the government extended that grace period to help businesses expanding into a second premises.
If your property’s rateable value is £12,000 or less, make sure you’re actually claiming SBRR — it isn’t always applied automatically, and it’s the difference between a bill and no bill at all.
Other Reliefs Worth Knowing About
Depending on your circumstances, you may qualify for:
- Lower RHL multipliers — as above, for occupied retail, hospitality, and leisure properties under £500,000 RV.
- Transitional relief — a redesigned scheme (worth £3.2 billion) that caps how much your bill can rise in a single year after the revaluation, so increases are phased in rather than hitting all at once.
- Supporting Small Business (SSB) scheme — protects businesses that are losing some or all of their SBRR or RHL relief because of the revaluation, capping the increase.
- Pubs and Live Music Venues relief — a new 15% reduction for eligible pubs and live music venues in England for 2026/27, on top of other reliefs.
- Charitable rate relief — 80% mandatory relief for registered charities (and sometimes 100% at the council’s discretion).
- Rural rate relief — for certain businesses (like the only shop or pub) in designated rural areas.
- Empty property relief — properties are generally exempt for a period (3 months for most, 6 for industrial) after becoming empty.
- 100% relief for EV charging points and electric-vehicle-only forecourts.
Reliefs aren’t always applied automatically, so it’s worth checking with your council which ones you’re entitled to.
How to Check or Challenge Your Rateable Value
If you think your rateable value is wrong — and after a revaluation, errors do happen — you can challenge it. The process is:
- Check your property details and valuation on GOV.UK (search “find business rates”). You’ll need to set up a Business Rates Valuation Account with the VOA.
- Challenge the valuation if the facts are wrong, providing evidence (such as comparable rents).
- Appeal to the independent Valuation Tribunal if you can’t resolve it with the VOA.
Because the process can be involved, many businesses with significant bills use a reputable rating adviser — but be wary of cold-callers promising guaranteed savings for an upfront fee.
Practical Tips for Small Business Owners
- Check your 2026 bill carefully. With a revaluation and new multipliers, don’t assume it’s the same as last year — verify the rateable value and the reliefs applied.
- Claim every relief you’re entitled to. SBRR in particular can reduce your bill to zero, but you may need to apply.
- Budget for the change. If you’re an RHL business, factor in that the 40% relief has gone.
- Query anything that looks wrong. Councils and the VOA make mistakes; it’s your money.
- Watch the second-property trap. Taking on another premises can affect your SBRR, though the grace period gives you breathing room.
FAQ
How are business rates calculated in 2026?
Your bill is your property’s rateable value multiplied by the relevant multiplier, minus any reliefs. Following the 2026 revaluation (effective 1 April 2026, based on April 2024 rental values), England moved from two multipliers to five, ranging from 38.2p for small retail/hospitality/leisure properties to 50.8p for properties with a rateable value of £500,000 or more. Reliefs such as Small Business Rate Relief can then reduce the bill significantly.
Do I have to pay business rates if I work from home?
Usually not. If you work from home in an ordinary way — using a room as an office, for example — you generally won’t pay business rates. You might become liable if part of your home is used exclusively for business (such as a converted outbuilding or a room turned into a shop or salon), or if you have customers or employees coming to the property. If in doubt, check with the VOA.
What is Small Business Rate Relief and how do I get it?
Small Business Rate Relief gives 100% relief (a zero bill) on properties with a rateable value of £12,000 or less, with tapered relief up to £15,000. You generally need to occupy only one property to qualify. It isn’t always applied automatically — contact your local council to claim it if you think you’re eligible.
Why did my business rates go up in 2026 even though there are new “lower” multipliers?
Two reasons. First, the 2026 revaluation may have increased your rateable value (new values are based on 2024 rents, which have recovered since the pandemic). Second, if you’re a retail, hospitality, or leisure business, the temporary 40% relief ended on 31 March 2026 — and although the new RHL multipliers are lower, they don’t always fully offset the loss of that relief plus a higher rateable value. Transitional relief may cap how fast the increase hits.
Conclusion
Business rates can be a substantial cost, but they’re also an area where a bit of attention pays off — especially in 2026, a year of unusually big change. The essentials: your bill is your rateable value times the relevant multiplier, less any reliefs; the 2026 revaluation and the new five-multiplier system mean you should check your bill rather than assume; and reliefs like Small Business Rate Relief can reduce what you pay to nothing.
Remember, too, that these figures apply to England — if you’re in Scotland, Wales, or Northern Ireland, your system differs. And because valuations and reliefs can be complex and mistakes do happen, it’s worth checking your rateable value on GOV.UK and speaking to your council or a reputable adviser if your bill looks wrong or has jumped sharply.
This article is for general information only and does not constitute tax or financial advice. Business rates rules, multipliers, and reliefs change and vary by nation and individual circumstances — always confirm the current position at GOV.UK, with your local council, or with a qualified adviser before making decisions.