What are business rates?

Business rates are a tax on non-domestic properties. In England, they’re collected by local councils and help to fund local services.

You’ll usually have to pay business rates if you use a non-domestic property for your business, such as a:

• shop
• office
• pub
• warehouse
• factory.

Business rates can also apply to some properties that are used for both domestic and business purposes.

If you pay business rates for your business premises, you can normally claim them as an allowable business expense when calculating your taxable profits.

Different systems apply in Scotland, Wales and Northern Ireland, so check the rules that apply where your business premises are located.

Business rates relief can reduce the amount of business rates you have to pay or, in some cases, reduce your bill to zero. The relief available depends on factors such as the type and location of your property, its rateable value and how it’s used.

In England, examples of business rates relief include:

• Small Business Rate Relief
• Rural Rate Relief
• Charitable Rate Relief
• relief for certain empty properties
• Transitional Relief, which limits how quickly bills can increase following a revaluation.

Some properties are exempt from business rates altogether rather than qualifying for relief. These include certain agricultural properties and buildings used for religious worship or the welfare of disabled people.

The reliefs available and eligibility rules are different in England, Scotland, Wales and Northern Ireland, so check the guidance for where your property is located:

• England
• Scotland
• Wales
• Northern Ireland.

In England, business rates are paid to your local council. Your council will send you a business rates bill, usually in February or March, for the following billing year starting on 1 April.

Your bill will show:

• how much you need to pay;
• how the amount has been calculated;
• any business rates relief applied; and
• when and how you need to make payments.

Business rates are normally paid in instalments throughout the year. Your council will provide details of the payment methods available.

You can use the GOV.UK business rates calculator to estimate your bill. If you have questions about your bill, including the payments or relief shown, contact your local council.

Different arrangements apply in Scotland, Wales and Northern Ireland, so check the relevant guidance for your business location.

If you run your business from home, you won’t usually have to pay business rates if you only use a small part of your home for business purposes, such as using a bedroom as an office.

However, you may have to pay business rates on part of your property if, for example:

• part of your property is used exclusively for business purposes;
• customers visit your property to buy goods or receive services;
• you employ other people to work at your property; or
• you’ve made alterations to your home specifically for your business, such as converting a garage into a salon.

You may also have to pay both Council Tax and business rates if your property has separate domestic and business areas, such as a shop with living accommodation above it.

Whether business rates apply will depend on how your property is used and how it is assessed. In England and Wales, you can contact the Valuation Office Agency (VOA) if you’re unsure whether your property should be assessed for business rates.

Different arrangements apply in Scotland and Northern Ireland, so check the guidance for where your property is located.

For more information, see the GOV.UK guidance on business rates when working from home.