How are business rates calculated?

Business rates apply to all businesses operating in non-domestic, commercial premises.

Even if you work from home, you may still need to pay business rates if the room you work in is used exclusively for business purposes.

Understanding how to calculate business rates ensures you’re paying the right amount, and can help when planning your financial year ahead. It’s also helpful for businesses thinking of moving to new premises, where different business rates will come into effect.  

Find out how business rates are calculated, and how to estimate your own rates, with this simple guide.

business-owner-using-energy

 

Calculating your business rates 

To calculate your estimated business rates for the year ahead, you need to multiply the government’s up-to-date ‘multiplier’ by the rateable value of your business.

Multipliers

A multiplier (or poundage rate) is the number of pence-per-pound of rateable value that you need to pay through business rates. The government reviews the multipliers each year in line with inflation.

To access the current business rate multipliers, click here.

Rateable value

Rateable value is the value assigned to non-domestic premises by the Valuation Office Agency, and is based on a property’s annual market rent, its size, and its usage. The Valuation Office Agency reviews these values every five years and often values properties at different levels.

To find the rateable value for your business premises, click here.

For an estimate of your business rates, multiply the rateable value by the current multiplier. We’ve included an example below to help you understand how this process works.

Example:

  • 4p — current business rate multiplier 2016/17 for small businesses in England
  • £10,000 — rateable value of the small business premises
  • 48.4p x £10,000 = £4,840 estimated business rate for 2016/17

Please note: Business rates are calculated differently in Scotland and Northern Ireland. To access the Scottish government’s business rates calculator, click here. For business rates in Northern Ireland, click here.

Useful resources

For more information on business rates, including advice on whether your business is eligible for business rate relief or reductions, we’d recommend the following resources 

For the government’s Business premises and business rates page, click here.

For the Valuation Office Agency website, click here.