Opening a Shop or Office in the UK? Small Business Relief Could Save You Thousands of Pounds!
- TBA
- Nov 12
- 4 min read
In the UK, residential properties are subject to council tax, while non-residential properties are charged business rates.
If you plan to start a business or are already operating from commercial premises, business rates are a crucial tax to understand in addition to company registration, accounting and tax filing. Business rates are closely tied to your eligibility for Small Business Rate Relief (SBRR).
What are business rates?
Business rates are a tax collected and managed by local councils, although the rates and rules are set by the central government.
Owners or tenants who use all or part of a building for non-residential purposes generally have to pay business rates.
Common examples include:
Offices
Shops
Warehouses
Pubs
Other commercial premises
In addition, if you own furnished holiday lets or self-catering accommodation that is available to let for more than 140 days a year, you may also be liable for business rates instead of council tax. Agricultural buildings and those used to support disabled people are also generally exempt.
How business rates are calculated and paid
After a detailed calculation, local councils usually send your business rates bill for the upcoming tax year between February and March each year. In other words, you should plan and budget for the next year’s payment in advance.
In England and Wales, business rates are calculated based on two key elements:
1. Rateable value
Each commercial property is assigned a ‘rateable value’ by the Valuation Office Agency (VOA). This value is based on the property’s estimated market rent as of 1 April 2021.
2. Multiplier
The rateable value is multiplied by a government-set ‘multiplier’ to determine the amount payable. The multiplier is set nationally, helping you roughly estimate how much business rates you will owe.
For the 2025/26 tax year, the standard multiplier is 55.5 pence, and the small business multiplier is 49.9 pence.
It is important to note that the VOA may request additional information about your property to accurately assess its rateable value.
You can request an extension if more time is needed to prepare. If you believe the council’s calculation is incorrect, you may apply for a reassessment.
Business rates relief for small businesses
Some businesses in England are eligible for business rates relief. If your property is in Scotland, Wales or Northern Ireland, different rules apply.
Your business may qualify for relief if it meets one of the following conditions:
It is classed as a small business
It operates in retail, hospitality or leisure (such as a shop, restaurant, entertainment venue or hotel)
It is the only business in a rural area
It is a registered charity or community amateur sports club
In England, the Small Business Rate Relief rules are as follows:
If your property’s rateable value is below £12,000, you will not pay any business rates.
If the rateable value is between £12,001 and £15,000, the relief gradually decreases from 100% to 0%.
For example, if your property has a rateable value of £13,500, you will receive a 50% discount on your bill. A property valued at £14,000 would receive a 33% discount.
Normally, businesses can only claim relief for one property. However, you may still qualify if you have multiple properties, provided that:
The total rateable value of all properties is under £20,000 (£28,000 in London), and
The rateable value of any other individual property does not exceed £2,899.
As long as these conditions are met, your main property will continue to qualify for relief for one year.
Other available reliefs
Your business may also qualify for other types of relief if:
Your property is empty, partially vacant or under refurbishment
You have made specific improvements to the property
Your bill has changed significantly due to a revaluation
You face reduced small business or rural relief from 1 April 2023
Your business is facing financial hardship
Your property is located in an Enterprise Zone or Freeport
Your property is part of a heat network infrastructure
If your property has been affected by serious local disruption such as flooding, nearby construction or roadworks, you may also apply for temporary rate relief.
Some advice from TB Accountants
It is important to note that business rate calculations are not fixed. If your business changes in nature or moves to a new location, your Small Business Rate Relief entitlement may also change. For example, if your property’s rateable value increases, the amount of relief available may decrease accordingly.
For new small businesses or those renting commercial premises for the first time, we strongly recommend checking the property’s rateable value before signing a lease.
Consult a qualified accountant or tax adviser to confirm whether you are eligible for relief and what documentation is required.
At the same time, plan your cash flow carefully to ensure that your business rates are paid on time each year to avoid penalties or surcharges.
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