Who pays business rates and how are they calculated?
Business rates = Rateable Value (RV) × Uniform Business Rate (UBR). The RV is set by the Valuation Office Agency (VOA) in England and Wales — based on the estimated annual rental value of the property. For the current 2023 rating list (effective 1 April 2023), the antecedent valuation date was 1 April 2021. The occupier of a non-domestic property is liable for business rates — when the property is let, the tenant pays; when the property is empty, the owner becomes liable.
Uniform Business Rate (UBR) and key reliefs
- UBR 2024/25 (England): standard rate 54.6p in the pound; small business rate 49.9p (for properties with RV under £51,000 where the ratepayer does not claim SBRR for another property)
- Small Business Rate Relief (SBRR) — England: 100% relief for RV up to £12,000 (no rates payable); tapered relief for RV £12,001-£15,000; standard small business UBR applies for RV £15,001-£51,000
- Retail, Hospitality and Leisure (RHL) relief: periodic government discount for qualifying properties — applied automatically by local authorities; check current government guidance for the percentage
- Charitable relief: registered charities as rateable occupier — 80% mandatory relief; local authority may grant up to 20% further discretionary relief; charity must be the genuine rateable occupier
- Rural rate relief: sole general store; sole post office; sole pub; petrol filling station in a rural settlement (population under 3,000) — 100% mandatory relief
Empty property rates: when the owner becomes liable
- Once a commercial property becomes empty, the owner is exempt from rates for: 3 months — general commercial property (offices; retail; other); 6 months — industrial and storage property (warehouses; factories; industrial units)
- After the exemption expires: the owner pays full business rates on the empty property with no automatic cap — liability continues indefinitely until re-occupation or a qualifying exemption applies
- Ongoing exemptions (after initial exemption period): property with RV below £2,900 — 100% exempt; listed buildings — exempt; properties subject to insolvency (insolvency practitioner as owner in their capacity as such); properties prohibited from occupancy by law
Empty property rate mitigation strategies
- Six-week re-occupation: if the property is genuinely re-occupied for at least 6 weeks of genuine commercial activity, this restarts the 3-month (or 6-month) exemption period when the property next empties — occupation must be genuine; courts and local authorities scrutinise sham arrangements (Makro Self Service Wholesalers Ltd v Nuneaton [2012]); hold keys is not enough; a formal short-term licence agreement with actual use is required
- Charity occupation: if a registered charity becomes the genuine rateable occupier, 80% mandatory charitable relief applies — effectively reducing liability to 20%; the charity must have genuine exclusive occupation and use the property for charitable purposes; sham arrangements are challenged
- Listed building exemption: if the property is a listed building, it is exempt from empty property rates regardless of how long it has been empty
- Properties below RV £2,900: exempt from empty rates regardless of duration
Rating appeals: challenging the rateable value (Check Challenge Appeal)
- If the RV is considered too high, challenge it through the Check, Challenge, Appeal (CCA) process via the VOA's business rates portal
- Step 1 — Check: log into the VOA portal; check or provide information about the property; the VOA may revise the RV
- Step 2 — Challenge: if the RV remains too high, submit a formal challenge; the VOA investigates and issues a decision
- Step 3 — Appeal: if the challenge is rejected, appeal to the Valuation Tribunal for England (or Valuation Tribunal for Wales; Valuation Appeal Panel in Scotland); no fee for Check/Challenge; modest fee for Tribunal appeal
- Success reduces rate liability retrospectively from the effective date of the challenge
Scotland and Wales
- Scotland — Small Business Bonus Scheme (SBBS): 100% relief for RV up to £12,000; 25% relief for RV £12,001-£15,000; 25% relief for RV £15,001-£18,000 where combined RV of all Scotland properties is under £35,000; the Scottish UBR is set annually by the Scottish Government (differs from England/Wales); Scotland's 2023 revaluation is effective from 1 April 2023; rating appeals go to the Valuation Appeal Panel (Scotland)
- Wales: the Welsh UBR is set by the Welsh Government; small business rate relief thresholds differ from England — 100% relief for RV up to £6,000; 50% relief for RV £6,001-£12,000; Valuation Tribunal for Wales hears rating appeals