Business Rates Estimator (UK)
Estimate your 2024/2025 business rates liability.
How Are Business Rates Calculated?
Understanding how business rates are calculated is essential for commercial property tenants and owners in the United Kingdom. Similar to Council Tax for residential properties, business rates are a tax charged on most non-domestic properties, including shops, offices, pubs, and warehouses.
The calculation might seem complex at first, but it follows a standard formula established by the government. The core equation is:
1. The Rateable Value (RV)
Every non-domestic property has a Rateable Value, set by the Valuation Office Agency (VOA). This figure represents the estimated annual rent the property would command on the open market as of a specific valuation date.
- Revaluation: The VOA updates these values periodically (usually every 3 years) to reflect changes in the property market.
- Checking your RV: You can find your specific Rateable Value on the UK government's VOA website.
2. The Multiplier (Poundage)
The multiplier is the number of pence you pay for every pound of Rateable Value. These figures are set by the central government and change each tax year (April to March).
For the 2024/2025 tax year, there are two primary multipliers:
- Small Business Multiplier (49.9p): Applies if your Rateable Value is below £51,000.
- Standard Multiplier (54.6p): Applies if your Rateable Value is £51,000 or more.
3. Applying Reliefs
The final step in how business rates are calculated involves deducting any reliefs you are eligible for. These can significantly reduce your bill, sometimes to zero.
Small Business Rate Relief (SBRR)
If you only use one property and its Rateable Value is less than £15,000, you may qualify for SBRR:
- RV up to £12,000: You get 100% relief (you pay £0).
- RV £12,001 to £15,000: The relief tapers down from 100% to 0%.
Retail, Hospitality, and Leisure Relief
For the 2024/25 tax year, eligible businesses in these sectors can receive 75% off their business rates bill (up to a cash cap of £110,000 per business). This is applied after any mandatory reliefs like SBRR.
Example Calculation
Let's say you run a small coffee shop (your only property) with a Rateable Value of £13,500.
- Base Calculation: Since RV is under £51,000, use the Small Business Multiplier (0.499).
£13,500 × 0.499 = £6,736.50 - SBRR Adjustment: Your RV is £1,500 over the £12,000 threshold. The band is £3,000 (£15k – £12k).
You pay on the proportion above £12k: (13500 – 12000) / 3000 = 50% payable.
So you get 50% relief. - Final Bill: £6,736.50 × 50% = £3,368.25.
Use the calculator above to run these numbers for your specific property scenario.