Business rates for small businesses: key facts
- You'll probably have to pay business rates if you use a building, or part of one, for non-domestic purposes. Your bill starts from the property's rateable value, set by the Valuation Office Agency (VOA).
- Using a small part of your home for work, such as a bedroom as an office, does not usually mean paying business rates. Seeing customers at home, employing staff there or converting part of it can change that.
- In England in 2026/27, a business using one property with a rateable value of £12,000 or less pays no business rates under small business rate relief. Relief tapers to nothing at £15,000.
- Any property in England with a rateable value under £51,000 is billed on the 43.2p small business multiplier, even if it gets no small business rate relief.
- Qualifying retail, hospitality and leisure properties in England under £51,000 use a lower 38.2p multiplier in 2026/27.
- Many properties in England also pay a 1p transitional relief supplement in 2026/27 unless they get transitional relief or supporting small business relief.
- In Wales, small business rates relief is full up to £6,000 rateable value and tapers to nothing at £12,000, and can cover up to two properties per business in each council area.
- If your property is already fully relieved, a successful challenge may not change what you pay now, although it can matter later.
Do small businesses have to pay business rates?
Business rates apply to most non-domestic property, whatever the size of the business. But in England a business using a single property with a rateable value of £12,000 or less pays nothing under small business rate relief, so many very small firms get a bill showing a zero or near-zero amount.
Business rates are a tax on the property, not on the business's turnover or profit. So a one-person firm in a small unit and a national chain are charged using the same steps: the property's rateable value, multiplied by a multiplier, less any reliefs. What changes for small firms is mostly at the relief stage.
Three questions decide where you stand:
- Is the property non-domestic? Shops, offices, workshops, pubs, cafes, holiday lets and similar are. A home used lightly for work usually isn't (see the next section).
- What is its rateable value? This is the VOA's estimate of the yearly rent at 1 April 2024, not your actual rent. Our guide to what rateable value is explains it.
- How many properties does the business use, and what does it do? This decides whether you get small business rate relief and which multiplier applies.
Some properties are exempt altogether, for example farm buildings and places used for the welfare of disabled people. Stables are usually rateable unless the horses are used for farming, although stables in a garden may fall under Council Tax instead.
Do I pay business rates if I work from home?
Usually not, if you use a small part of your home for work (a bedroom used as an office, for example) or you sell goods by post. You may have to pay business rates as well as Council Tax if customers visit, you employ people to work there, part of the property is business and part domestic, or you've altered your home for the business.
GOV.UK sets out the general position for home-based businesses.
| Usually no business rates | May mean business rates as well as Council Tax |
|---|---|
| Using a small part of your home for work, such as a spare bedroom as an office | The property is part business, part home, such as living above your shop |
| Selling goods by post | Selling goods or services to people who visit the property |
| Employing other people to work at the property | |
| Making changes to the home for the business, such as converting a garage into a hairdresser's |
It is the VOA (GOV.UK now calls it the Valuation Office) that decides whether part of a home should be valued for business rates, not the council and not us. If you're unsure, contact the VOA. If part of your home is valued, only that part gets a rateable value, and a modest home workroom may well fall within small business rate relief.
What should I know about business rates before taking my first premises?
Look up the property's rateable value before you sign, work out which multiplier and reliefs would apply to your business, and budget for the bill from the day you take it on. A cheap rent does not mean low rates: the rateable value is set independently by the VOA.
- Find the rateable value first. GOV.UK's "Find a business rates valuation" service shows it for any property in England and Wales, with a summary of how it was worked out.
- Check whether it's one property or several. Parts that touch and are used for similar purposes usually share one rateable value; parts separated by another occupier or shared areas (stairwells, lifts, corridors) get separate ones. Separate parking can have its own value too. That matters, because small business rate relief normally depends on using one property.
- Ask what the business will be used for. A shop or cafe may qualify for the lower retail, hospitality and leisure multipliers; an accountant's office or a dental surgery won't.
- Remember rates run daily. The charge is worked out day by day, so taking a unit mid-year means a part-year bill.
- Contact the council. Councils send bills and give reliefs; ask them which reliefs you'd be entitled to. In Wales, from 1 April 2026 you must tell the council within 60 days when you become the ratepayer, or face a £500 fine.
Our business rates calculator gives a quick 2026/27 estimate once you know the rateable value.
How does small business rate relief work, in brief?
In England in 2026/27, small business rate relief means no business rates on a property with a rateable value of £12,000 or less if it's the only property the business uses, with relief tapering from 100% to 0% between £12,001 and £15,000. In Wales, relief is 100% up to £6,000, tapering to nothing at £12,000.
We cover small business rate relief in more detail in a dedicated guide. The points that matter most for small firms:
England, 2026/27
- Rateable value £12,000 or less: nothing to pay, if it's your only property.
- £12,001 to £15,000: tapers down. GOV.UK gives £13,500 = 50% off and £14,000 = 33% off.
- £15,000 or more: no small business rate relief, but you still get the lower small business multiplier if the value is under £51,000.
- A second property: you keep relief on your main property for 36 months if you took the second one on or after 27 November 2025 (12 months if before). After that, you can keep it only if no other property is above £2,899 and the total is under £20,000 (£28,000 in London).
- Charities can't get small business rate relief and charitable relief together; the council decides which applies.
- Applying: GOV.UK tells you to contact your council to check you're eligible and how to get it. If you think you should be getting it and aren't, ask the council.
Wales, 2026/27
- 100% relief up to £6,000 rateable value, tapering to nothing at £12,000 (for example 50% at £9,000).
- Limited to two properties per business in each local authority; the property must be occupied.
- Registered childcare providers get 100% relief; post offices get 100% up to £9,000 and 50% from £9,001 to £12,000.
- Business Wales says it's applied automatically.
Which multiplier does a small business pay?
In England in 2026/27, a property with a rateable value under £51,000 uses the 43.2p small business multiplier, or 38.2p if it's a qualifying retail, hospitality or leisure (RHL) property. That applies whether or not you get small business rate relief. Wales has a single 35p retail multiplier for certain small shops and 50.2p for most other properties.
The multiplier is the pence-in-the-pound figure the council applies to your rateable value. For small firms in England the line that matters is £51,000:
| England 2026/27, rateable value under £51,000 | Multiplier |
|---|---|
| Qualifying retail, hospitality or leisure property (for example a shop, cafe, pub, gym or salon open to visiting customers) | 38.2p |
| Everything else (for example an office, workshop or warehouse) | 43.2p |
The RHL multipliers replaced the old retail, hospitality and leisure relief from 1 April 2026; you can't make a new claim for that relief. The RHL definition is set in law and some customer-facing businesses are deliberately left out, including financial services, medical and health services (such as GPs, dentists and physiotherapists), professional services (such as solicitors, accountants, architects, vets and estate agents), and betting shops. An empty property never gets the RHL multipliers.
Wales works differently. The 35p retail multiplier applies only to properties under £51,000 with certain rating list descriptions, mainly "shop and premises", kiosks, pharmacies and post offices. Cafes, pubs, restaurants, salons and offices pay the 50.2p standard multiplier. Our guide to how business rates are calculated sets out all the multipliers and the order reliefs are applied.
What about business rates for a small pub?
A small pub in England pays on the 38.2p RHL multiplier if its rateable value is under £51,000, and may get 15% pubs and live music venues relief in 2026/27. A village's only pub may get rural rate relief, and a pub with a low enough rateable value can get small business rate relief. In Wales, pubs can get 15% Food and Drink Hospitality Rates Relief.
Pubs are valued on trade rather than floor area, which our business rates for pubs guide explains. For a small or village pub the reliefs that may apply in England are:
- Rural rate relief: the only pub (or petrol station) in an eligible rural area with a population below 3,000 and a rateable value up to £12,500 pays no business rates if eligible. Your council keeps the list of eligible areas.
- Small business rate relief: if the pub is the only property and its rateable value is £15,000 or less.
- Pubs and live music venues relief: 15% off in 2026/27 for occupied pubs open to the public. It can be combined with transitional relief or supporting small business relief. Announced at the Budget on 28 October 2026, it is due to rise to 35% from 1 April 2027.
In Wales, Food and Drink Hospitality Rates Relief gives 15% off in 2026/27, and you need to apply to the council by 31 March 2027.
How much are business rates for a small business? Worked examples
It depends on the rateable value, the multiplier and the reliefs. In England in 2026/27 a single shop with a rateable value of £10,000 pays nothing, while a shop with a rateable value of £25,000 pays £9,800 if the 1p transitional relief supplement applies and no other relief does.
These are simplified illustrations for 2026/27, for a business using one property that has been in the rating list since before 1 April 2026. In England such properties pay the 1p transitional relief supplement unless they get transitional relief or supporting small business relief, so it is included here. Your bill may differ.
| Property (England) | Working | 2026/27 bill |
|---|---|---|
| Shop, rateable value £10,000 | Under £12,000, only property: full small business rate relief | £0 |
| Small office, rateable value £14,000 | £14,000 × (0.432 + 0.01) = £6,188; small business rate relief takes off one third: £6,188 ÷ 1.5 | £4,125 |
| Shop, rateable value £25,000 | £25,000 × (0.382 + 0.01) = £9,800; no small business rate relief | £9,800 |
| Workshop, rateable value £25,000 | £25,000 × (0.432 + 0.01) = £11,050; not RHL, so the higher small business multiplier | £11,050 |
The shop and workshop have the same rateable value but a £1,250 difference in the bill, purely because of the multiplier. If a property is on transitional relief or supporting small business relief, the 1p supplement doesn't apply but the bill is capped differently.
Wales example (from Business Wales): a property with a rateable value of £7,000 on the 50.2p standard multiplier has a liability of £3,514; small business rates relief of £2,928 leaves £586 to pay.
To try your own numbers, use our business rates calculator.
What should a small business check on its business rates bill?
Check that the rateable value matches the rating list, the right multiplier is used, small business rate relief is applied if you qualify, any transitional or supporting small business relief is shown, and the dates match when you actually occupied the property.
Bills arrive in February or March for the year starting 1 April. Go through it line by line:
- Rateable value: does it match the figure on GOV.UK's "Find a business rates valuation" service?
- Multiplier: in England, is it 38.2p if you're a qualifying shop, cafe or other RHL business, and 43.2p if not? A small firm wrongly on 48p or 50.8p is worth querying with the council.
- Small business rate relief: if the value is £15,000 or less and it's your only property, is relief shown? (In Wales, £12,000 or less.)
- 1p supplement: in England, a "transitional relief supplement" line is normal for many properties, but shouldn't appear if you're on transitional relief or supporting small business relief.
- Revaluation protection: if you lost some small business rate relief at the 2026 revaluation, supporting small business relief may limit your increase to £800 or a percentage cap, whichever is greater.
- Dates: rates are charged day by day, so the start date should match when you took the property on.
Questions about the bill, reliefs or paying by instalments go to the council. Questions about the rateable value go to the VOA.
Is it worth challenging a small business's rateable value?
It depends where your rateable value sits. If your property is already fully relieved, a lower rateable value may change nothing you pay now. A challenge is more likely to make a difference in the £12,000 to £15,000 taper, near the £51,000 multiplier threshold, or when you take on a second property.
A challenge isn't only about whether the value is wrong; it's also about whether correcting it would change your bill. Be realistic:
- Rateable value £12,000 or less, one property (England): you already pay nothing. Reducing the value would not reduce your bill today. It may still matter later, for example if you take on a second property and the combined total becomes the test.
- £12,001 to £15,000: every pound counts twice, because a lower value means both a lower starting figure and more relief.
- Just over £15,000: a correction to £15,000 or less could bring some relief back.
- Close to £51,000: dropping below it moves you onto the lower small business multiplier.
- Clear factual errors: the wrong floor area, a description that doesn't match the use, or parts that should be split or merged.
The process is Check, then Challenge, then Appeal, through your business rates valuation account. It's free to do yourself. You must raise a check first and challenge within four months of the check decision. The value can go down, up or stay the same, so make sure your evidence is solid. The steps and deadlines are in our guide on how to challenge business rates.
A rating surveyor can do it for you, but on a small bill their fee could be more than any saving, so agree fees in writing first. GOV.UK points to the RICS Helpline Scheme, where the first 30 minutes are free.
Related guides
Business rates for small businesses: frequently asked questions
Do small businesses pay business rates?
Most non-domestic property is liable whatever the size of the business. In England in 2026/27, a business using one property with a rateable value of £12,000 or less pays nothing under small business rate relief, and relief tapers away between £12,001 and £15,000.
Do I pay business rates if I run my business from home?
Not usually, if you use a small part of your home such as a bedroom as an office, or sell goods by post. You may need to pay business rates as well as Council Tax if customers visit, you employ people there, part of the property is used for business, or you've converted part of your home. The VOA decides; contact it if you're unsure.
What is the small business multiplier?
In England in 2026/27 it is 43.2p for properties with a rateable value under £51,000, or 38.2p for qualifying retail, hospitality and leisure properties. You're on it even if you don't get small business rate relief.
Do I need to apply for small business rate relief?
In England, GOV.UK tells you to contact your local council to check eligibility and find out how to get it. In Wales, Business Wales says it is applied automatically. If you think you should be getting it and aren't, contact the council.
What happens to small business rate relief if I take on a second property?
In England you keep relief on your main property for 36 months if you got the second property on or after 27 November 2025, or 12 months if before. After that you can keep it only if no other property has a rateable value above £2,899 and the total is under £20,000, or £28,000 in London.
Is my small business a retail, hospitality or leisure business?
Broadly, it is if the property is used wholly or mainly for selling goods or services to visiting members of the public, food and drink, accommodation, or cultural and leisure activities. Financial, medical and professional services such as accountants, dentists and estate agents are excluded by law.
Why does my small business rates bill include a 1p supplement?
In England in 2026/27, properties in the rating list on 31 March 2026 pay an extra 1p on the multiplier unless they get transitional relief, supporting small business relief or certain other reliefs. It is added before reliefs are taken off.
Is it worth challenging my rateable value if I pay nothing?
Probably not for the current bill, because a lower rateable value won't reduce a bill that is already zero. It may matter if you take on another property later or your circumstances change. A challenge can also lead to a higher value, so only go ahead with good evidence.
How is Wales different for small businesses?
Wales has its own small business rates relief: 100% up to £6,000 rateable value, tapering to nothing at £12,000, for up to two properties per business in each council area. Its multipliers are also different, and you must tell the council within 60 days when you become the ratepayer.
Who do I contact about my small business rates?
Your council for the bill, reliefs and paying by instalments. The Valuation Office Agency if you think the rateable value or property details are wrong, which you can raise through a business rates valuation account.
Sources
We checked the facts on this page against these official sources on 12 November 2026: