What are Business Rates – A Summary for Small Business

What are Business Rates – A Summary for Small Business


Business rates or non-domestic rates are taxes on commercial properties, and it is one of the oldest taxes in the UK, with its origins dating back to the Poor Law of 1601.

Business rates are set by the central government – known as the Valuation Office Agency (VOA), an agency of Her Majesty’s Revenue and Customs (HMRC).

If you plan to run a business from a commercial property, here is some valuable information you should know:


What are business rates – a summary for small business - The una group


Why do Companies Pay Business Rates?


Business rates are taxes on the occupation of non-domestic properties designed to fund services in your local government. The council utilises the taxes collected for services such as police, fire, waste management, etc.


Do I Have to Pay Business Rates?


The council charges business rates on commercial properties, such as offices, pubs, stores, factories, warehouses, and holiday properties – among others. However, if you run a business from a small or medium office and it’s your only business premise, it is likely you can apply for small business rate relief, so your organisation does not need to pay for rates.


What is Small Business Rate Relief?


There are various ways to reduce your business rates bill, one of them being small business rate relief. It means you might not need to pay the full estimated business rates.

In England, your organisation can get relief if your business only uses one property, and it has a rateable value of less than £15,000.

Properties with a rateable value of £12,000 or less have the full relief, which means you don’t pay at all. For properties between £12,001 and £15,000, relief goes down gradually from 100% to 0%.

Note that business rates are handled differently in Scotland and Northern Ireland.


How do You Estimate Business Rates?


The business rates are estimated at approximately 50 percent of the property’s annual rent. They are administered and collected by local authorities, known as The Valuation Office Agency (VOA), and are based on a property’s rateable value (RV).

The rateable value is the estimative value of your property on the open market. Revaluation usually happens every five years, and the next revaluation is underway for 2023.

To understand whether you need to pay and estimate your business rates bill, you can check through the Valuation Office Agency (VOA).


There are Other Business Rates Reliefs Available, Essentially:


Rural rate relief; Charitable rate relief; Enterprise zones; Exempted buildings and empty buildings relief; Hardship relief; Transitional relief; Retail discount, Local newspaper relief, and Nurseries discount.  Most of these reliefs are temporary reliefs introduced by the government at budgets, but some can also be permanent reliefs.


Do I Need to Pay Business Rates to run my Business from Home?


You won’t normally have to pay for business rates if you just sell some goods from home or simply use a part of your house as your home office. However, in some cases, if you use your home for business purposes, you may need to pay business rates on top of Council tax. Those are situations such as if staff, customers, or clients spend working time at the premise or if part of your house is exclusively used for business – better known as ‘non-domestic activity’, then business rates may be applied. 


Do Unoccupied Properties Still Need to Pay Business Rates?


Empty properties still need to pay the rates. Yet, some properties can get extended empty property relief. When there is no occupier, the bills are forwarded to the landlord after three months, usually the full bill.
Industrial properties, such as warehouses, for example, are exempt for a further three months. Other buildings with a rateable value below £2,900 and listed buildings can get extended exemptions until they’re reoccupied. This is the same for properties owned by charities – but only if the property’s next use will be mainly for charitable purposes. 

For further information, you can use the government website or contact a local surveyor.


Contact Us


Would you like to know more about office space for your organisation?  Please get in touch with The Una Group! You can reach us by phone at 01752 697000 or email us via the contact form. Don’t forget to check out our range of commercial properties in Plymouth – your perfect office space may be just a click away!