How to Calculate Business Rates: Step-by-Step with Examples

Understanding how to calculate business rates is essential for every UK business owner with a commercial property. Business rates are a type of local taxation that often represents a significant cost for shops, offices, warehouses, and factories. Many businesses find the process confusing, especially with frequent government updates, relief schemes, and revaluations.

This step-by-step guide will explain what business rates are, how they’re calculated, and provide clear examples so you can estimate your own bill with confidence.

What Are Business Rates? 

Business rates (sometimes called non-domestic rates) are taxes charged on most non-residential properties in the UK. They help fund local services, such as schools, waste collection, and emergency services.

Business rates are typically payable when a building, or a section of it, is used for business purposes. This includes:

• Shops, supermarkets, and retail units

• Offices and co-working spaces

• Factories and warehouses

• Pubs, restaurants, and cafes

Some properties may be exempt (like small agricultural buildings or places of worship).

Key Terms You Need to Know Before Calculating

Before working out your bill, you should understand a few important terms:

• Rateable Value (RV): The open market rental value of your property, set by the Valuation Office Agency (VOA).

• Multiplier (Poundage): Each year, the government sets the rate, measured in pence per pound of a property’s value. There are usually two multipliers – the standard multiplier and the small business multiplier.

• Small Business Rate Relief (SBRR): A reduction in rates for properties with a lower rateable value.

• Transitional Relief: Helps phase in changes if your rates increase sharply after a revaluation.

Tip: You can check your property’s rateable value on the official VOA website.

The Business Rates Formula 

The basic calculation is:

Business Rates = Rateable Value × Multiplier

• Standard Multiplier: Applied to larger businesses.

• Small Business Multiplier: Applied to properties with a lower rateable value.

For example, if your RV is £20,000 and the multiplier is 0.499 (49.9p in the pound), your business rates before reliefs would be:

£20,000 × 0.499 = £9,980

Step-by-Step Guide: How to Calculate Business Rates

1. Find your property’s rateable value – Check the VOA website for your official RV.

2. Confirm the current multiplier – The government updates it yearly (different for England, Scotland, Wales, and NI).

3. Multiply RV by multiplier – This gives your gross rates bill.

4. Apply any eligible reliefs – Small business, charitable, or retail relief may reduce your bill.

Business Rates Calculation Examples 

Example 1: Small Shop

• Rateable Value: £12,000

• Multiplier: 0.499 (49.9p)

• Calculation: £12,000 × 0.499 = £5,988

• Eligible for Small Business Rate Relief, which could reduce the bill to £0.

Example 2: Large Office

• Rateable Value: £100,000

• Multiplier: 0.512 (51.2p)

• Calculation: £100,000 × 0.512 = £51,200

• Relief unlikely (due to high RV).

Comparison Table

Business Rates Reliefs You Should Know

There are several relief schemes available:

• Small Business Rate Relief (SBRR): Properties with RV under £15,000 may qualify for reductions.

• Rural Rate Relief: Relevant to properties in villages and rural towns with populations below 3,000.

• Charitable Relief: Up to 80% off if the property is used for charitable purposes.

• Enterprise Zone Relief: Discounts in designated enterprise zones.

• Retail, Hospitality & Leisure Relief: Temporary relief offered by the government (check current year rules).

Always check with your local council for eligibility.

Common Mistakes When Calculating Business Rates 

• Using old multipliers instead of the current year’s rate.

• Forgetting to apply reliefs that could reduce the bill significantly.

• Not checking for revaluations that may affect the rateable value.

How to Check and Appeal Your Rateable Value

If you believe your RV is too high, you can:

1. Check the VOA listing for your property.

2. Contact the VOA if there’s an error.

3. Formally appeal (known as “Check and Challenge”).

Professional surveyors can also help if your property valuation seems unfair. 

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Business Rates 2025 Update 

• The multipliers for 2025 are expected to be around 49.9p (small business) and 51.2p (standard).

• Some sectors may still benefit from retail and hospitality relief.

• The government continues to review reforms, so always check official updates before calculating.

Quick Reference Table: Business Rates Formula

FAQs on Business Rates

1. What is the multiplier for business rates in 2025? 

The provisional multipliers are around 49.9p (small business) and 51.2p (standard). Always check gov.uk for updates.

2. Do all businesses have to pay business rates?   

Most non-domestic properties must pay, but exemptions exist for some small or agricultural properties.

3. How often are rateable values updated? 

Every few years, properties are revalued—the last update happened in 2023.

4. Can I get full exemption from business rates? 

Yes, small businesses with low RVs, charities, or rural shops may qualify for full relief.

5. How do I appeal if I think my rates are too high? 

You can “Check and Challenge” your rateable value via the VOA.

Conclusion

Learning how to calculate business rates helps you manage one of your biggest business expenses. By understanding the formula, checking your rateable value, and applying for eligible reliefs, you can ensure you’re not overpaying.

Take action today: check your property’s rateable value on the VOA website and calculate your business rates with confidence. 

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