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Business rates are a type of tax on non-domestic properties, like offices, restaurants, shops, and factories. They are important for funding local governments. However, calculating them and understanding recent changes can be confusing. This article explains the current situation of business rates in the UK. It covers the systems in England, Scotland, Wales, and Northern Ireland and discusses the relief schemes that help businesses manage their costs.
Understanding How Business Rates Work
Business rates are calculated by taking the property’s “rateable value” (RV) and multiplying it by a multiplier, which is expressed in pence per pound. The rateable value is an assessment of the open market value of the property at a specific point in time. Multipliers differ based on the size and type of property, and there are often separate multipliers for small businesses versus larger properties. Additionally, various relief schemes are available to reduce the overall bill, making it crucial for businesses to understand their specific circumstances.
Business Rates in England
In England, business rates are managed through the Stamp Duty Land Tax system for non-domestic properties. For 2024/25, there are two main multipliers:
- Small Business Multiplier: For properties with an RV below £51,000, the multiplier is 49.9p.
- Standard Multiplier: For properties with an RV above £51,000, the multiplier is 54.6p.
Relief schemes such as Retail, Hospitality, and Leisure Relief provide a 75% reduction for qualifying businesses up to a maximum of £110,000 per business. Small Business Rates Relief also applies, offering full relief for properties with an RV below £12,000, with tapering relief for those with values between £12,001 and £15,000. Recent announcements from the Autumn Budget 2024 indicate significant changes for 2025/26, including a reduction of the retail, hospitality, and leisure relief from 75% to 40%, a freeze on the small business multiplier, and an increase in the standard multiplier to 55.5p. These changes are expected to lead to noticeable increases in bills for many businesses.
Business Rates in Scotland
Scotland operates its own system with three multipliers:
- Basic Property Rate: 49.8p for properties with an RV up to £51,000.
- Intermediate Property Rate: 54.5p for properties with an RV between £51,000 and £100,000.
- Higher Property Rate: 55.9p for properties with an RV above £100,000.
In addition to these multipliers, relief schemes such as the Small Business Bonus Scheme (SBBR) allow businesses with a combined RV of £35,000 or less or individual premises valued at £20,000 or less to receive up to 100% relief. Hospitality businesses, especially in the Highlands and Islands, benefit from full relief up to a cap of £110,000 per business. The Scottish Budget for 2025/26 has introduced changes, including freezing the basic rate, but with planned increases for the intermediate and higher rates, alongside a new 40% relief for hospitality businesses on properties eligible for the basic rate.
Business Rates in Wales
Wales uses a single multiplier for all properties, which for 2024/25 is set at 56.2p. Relief schemes in Wales include:
- Retail, Leisure and Hospitality Rates Relief: Offering a 40% reduction, capped at £110,000 per business.
- Small Business Rates Relief: This provides 100% relief for properties with an RV of up to £6,000 and a tapering relief for those with an RV between £6,001 and £12,000. It is limited to a maximum of two properties per business in each local authority.
The Welsh Government’s Budget for 2025/26 includes a cap on the increase to the multiplier at 1%, which is a more moderate change compared to previous adjustments.
Business Rates in Northern Ireland
Northern Ireland has a unique system that combines two multipliers: one set by district councils and another by the Northern Ireland Executive. For 2024/25, the regional multiplier is 29.02p, while district council multipliers range from 25.69p to 38.22p. Combined, this results in cumulative multipliers between 54.71p and 67.24p. Relief schemes in Northern Ireland include Small Business Rate Relief (SBRR), which provides reductions of 50%, 25%, or 20% depending on the net annual value of the property.
Recent announcements by the Northern Ireland Executive include the development of a new valuation list to be used from April 2026. This comprehensive review aims to refine Small Business Rate Relief policies and address exclusions for vacant properties.
What Businesses Should Do
Businesses should review their rateable values and understand how new multipliers and relief schemes may affect their bills. It’s important to plan for potential increases in business rates and adjust cash flow forecasts. If a business believes its rateable value is too high, challenging the assessment may be an option through the appropriate authority:
- England and Wales: Contact the Valuation Office Agency.
- Scotland: Approach the Scottish Assessors.
- Northern Ireland: Reach out to the Commissioner of Valuation.
Additionally, businesses should ensure they are claiming all available reliefs to minimize their financial burden.
UK business rates are a complex yet vital part of managing non-domestic properties. Changes in multipliers and relief schemes across the UK highlight the evolving economic landscape. Business owners and property investors need to stay informed and seek expert advice to manage costs effectively. This review of current business rates provides insights to help navigate these challenges and confidently plan for the future.