What Are Business Rates

Business rates are a local property tax charged on most non-domestic and commercial properties in the UK, functioning similarly to how Council Tax applies to residential homes. They are levied on buildings used for purposes like shops, offices, warehouses, and factories, with the funds primarily used by local authorities to help pay for essential public services. 

Unlike Council Tax, 50% of the revenue generated from Business Rates is kept by Local Authorities.

How Business Rates Are Calculated

Your annual business rates bill is calculated by multiplying the property’s “rateable value” by a “multiplier”, also known as the uniform business rate (UBR) set by the government. 

Whilst this has traditionally been set by tracking inflation and the Retail Price Index, post pandemic the government kept the UBR unchanged and starting in 2026 they have overhauled the system, changing from the previous Standard and Small Business multipliers to five different multipliers, these being as follows for the 2026/277 financial year:

Retail, Hospitality, and Leisure (RHL) Multipliers

• Standard RHL: 43.0p (for rateable values between £51,000 and £499,999)
• Large Property: 50.8p (for rateable values of £500,000 and above)

Note: If you are an eligible RHL property with a rateable value under £51,000, your multiplier is lower still (typically around 39.2p).

Standard Business Multipliers (Non-RHL)

• Small Business: 43.2p (for rateable values below £51,000)
• Standard Business: 48.0p (for rateable values between £51,000 and £499,999)

Large Business Multipliers (Non-RHL)

• Large Property: 50.8p (for rateable values of £500,000 and above, across all sectors) 

This change was primarily aimed at subsidizing targeted relief for smaller shops, shifting the property tax burden from physical high streets to e-commerce giants, and to eliminate the “cliff-edge” of temporary discount schemes which the Retail, Hospitality, and Leisure sectors had enjoyed in the post-pandemic era.

What You Actually Pay

In simple terms, your business rates bill is calculated by multiplying your property’s Rateable Value (RV) by the correct multiplier (UBR), however with frequent Revaluations there is the possibility of your rates bill increasing dramatically every 3 years. To ensure this doesn’t happen, there is a system referred to as ‘Transitional Relief’.

Transitional Relief phases in significant increases in your property’s business rates bill gradually. Following a revaluation, the scheme applies statutory percentage caps to yearly bill hikes over a three-year period.

How the 2026–2029 Transitional Relief Scheme Works

Your eligibility will be assessed automatically by your local authority based on central government mandated percentage caps on how much your business rates bill can increase from one financial year to the next. 

• Cap Application: Caps apply strictly to changes caused by the nationwide revaluation. They do not cover bill increases resulting from property changes (like renovations or extensions) after 1 April 2026.
• Automatic Roll-off: Relief stops automatically once your phased bills catch up to the true revaluation amount.

Yearly Upward Caps (2026 Scheme)

The exact cap depends directly on the Rateable Value (RV) of your commercial property: 

Property Size & Rateable Value	2026 to 2027	2027 to 2028	2028 to 2029
Small Business (RV up to £20,000 / £28,000 in London)	5%	10% + inflation	25% + inflation
Medium Business (RV £20,001 to £100,000)	15%	25% + inflation	40% + inflation
Large Business (RV over £100,000)	30%	25% + inflation	25% + inflation

Small Business Rates Relief

Businesses occupying a single property with a rateable value below £15,000 (in England) may be eligible for up to 100% relief – this is calculated on a sliding scale from 100% for properties with a Rateable Value below £12,000 to 0% for properties with an RV of £15,000 and over.

You generally only get relief on your main property if you occupy only one property.  You can still get relief if you use more than one property, provided the Rateable Value of each of your other properties is less than £2,900, and the total Rateable Value of all your properties does not exceed £20,000 (£28,000 in London).

Relief only applies to one property, and you can keep relief on your main property for 12 months if you take on a second property.

Who Pays

The occupier of the commercial property is responsible for paying the business rates. If the property sits empty, the owner or the leaseholder is generally liable for the rates.

Why You Need Professional Advice

Rating Law in the UK has transitioned from an ancient, highly localized property tax to a modernized, centralized regime and like any area of UK Law, it has been built up over may years by a combination of Statute and Case Law. Understanding how this affects the way in which your property is valued and keeping abreast of the latest changes is no small matter.

Whilst central government in the form of the VOA (now HMRC) is tasked with setting the value of your premises, the billing and payment of business rates is dealt with by your local authority. Understanding how these two relate is crucial to ensuring that you not only have the correct valuation, but also that you are paying the correct amount and are receiving any relief that you are entitled to.

Expert Guidance from Hellier Langston

Navigating the complexities of commercial property taxation requires a partner who understands the local market and the intricacies of government valuations. Whether you are looking to acquire new premises or want to discuss your current valuation, here at Hellier Langston we provide the expert insight needed to protect your financial interests.

Contact our Business Rates team today for professional advice on business rates, or to find out more about our commercial property services.