How business rates are calculated: key facts
- The starting sum is rateable value × multiplier. GOV.UK calls the result your business rates for the year before any relief.
- England has five multipliers in 2026/27: 38.2p, 43p, 43.2p, 48p and 50.8p. Wales has three: 0.350, 0.502 and 0.515.
- In England in 2026/27, most properties already in the rating list on 31 March 2026 that are not getting transitional relief or supporting small business relief pay a 1p transitional relief supplement on top of the multiplier.
- Reliefs come off in a set order: improvement relief, then transitional relief, then other mandatory reliefs such as small business rate relief, then discretionary reliefs, with pubs relief near the end.
- Business rates are charged by the day. If you are liable for part of the year, you pay for the days you are liable.
- Small business rate relief and charitable rate relief can't both apply. Your council decides which one you get.
- If the rateable value at the start of the sum is wrong, everything after it is wrong too. You can check and challenge it free through your business rates valuation account, or a rating surveyor can do it for you.
What is the formula for working out business rates?
Rateable value × multiplier = the yearly amount before relief. Your council then takes off any reliefs you qualify for. In England in 2026/27, many properties also pay a 1p supplement added to the multiplier.
GOV.UK sets out four steps to estimate a bill: find the rateable value, check which multiplier applies, multiply the two, then take away any relief. That is the whole method. The detail is in steps two and four, because England now has five multipliers and reliefs have to be applied in the right order.
Written as a formula for England in 2026/27:
The rateable value (RV) is the Valuation Office's estimate of the yearly rent the property could have been let for on the open market on 1 April 2024. It is a valuation figure, not the rent you pay and not your bill.
Here is how the four steps play out:
- Find your rateable value. It is on your bill, or you can look it up on GOV.UK with "Find a business rates valuation".
- Pick the multiplier. It depends on where the property is (England or Wales), the RV and, in England, whether the property counts as retail, hospitality or leisure.
- Multiply. In England, add 1p to the multiplier first if the transitional relief supplement applies to you.
- Take off reliefs in order. Each relief works on what is left after the ones before it.
The business rates calculator runs steps 2 to 4 for the main reliefs and shows each line, so you can follow the sum with your own figures. It does not add the 1p supplement explained below, so if that applies to you, your real bill will be a little higher than its estimate.
Which multiplier do I use to calculate business rates?
In England in 2026/27, retail, hospitality and leisure property uses 38.2p (RV under £51,000) or 43p (£51,000 to £499,999); other property uses 43.2p or 48p; any property with an RV of £500,000 or more uses 50.8p. In Wales, smaller shops use 0.350, most property 0.502 and property with an RV above £100,000 uses 0.515.
England, 1 April 2026 to 31 March 2027
| Property | RV under £51,000 | RV £51,000 to £499,999 | RV £500,000 or more |
|---|---|---|---|
| Occupied retail, hospitality or leisure property | 38.2p | 43p | 50.8p |
| Everything else, including all empty property | 43.2p | 48p | 50.8p |
Three questions decide which box you are in:
- What is the rateable value? Each property is tested on its own RV. You are on a small business multiplier if the RV is under £51,000, whether or not you get small business rate relief.
- Is it retail, hospitality or leisure? The lower multipliers are for property used wholly or mainly for things like shops, restaurants, cafes, pubs, hotels, gyms, cinemas and music venues. Some uses that look similar are excluded, including banks and other financial services, medical and professional services, estate agents and betting shops. If you are not sure, ask your council.
- Is it occupied? In law the retail, hospitality and leisure multipliers only apply to occupied property. An empty shop is charged on 43.2p or 48p.
The City of London sets its own multipliers, so bills there will differ.
Wales, 2026/27
| Multiplier | Rate | Applies to |
|---|---|---|
| Retail | 0.350 | RV below £51,000 where the rating list describes the property as a shop, kiosk, pharmacy or post office "and premises". Not cafes, pubs, restaurants, banks, betting shops or salons. |
| Standard | 0.502 | Most other property. |
| Higher | 0.515 | RV above £100,000, except some public-service properties such as schools, hospitals, libraries and leisure centres. |
In Wales the multiplier follows the description in the rating list, and the same multiplier applies whether the property is occupied or empty. The description makes a real difference: a shop with an RV of £30,000 on the retail multiplier is £30,000 × 0.350 = £10,500 before relief, but a cafe with the same RV is £30,000 × 0.502 = £15,060.
What is the 1p transitional relief supplement?
For 2026/27 in England, properties that were already in the rating list on 31 March 2026 and are not getting transitional relief or supporting small business relief pay an extra 1p on the multiplier. It is added before any reliefs and helps pay for transitional relief.
This is the step most simple bill estimates leave out. GOV.UK's estimate page and its worked examples don't mention it. The rules are in the Non-Domestic Rating (Chargeable Amounts) (England) Regulations 2026. For 2026/27:
- Who pays it: properties shown in the rating list on 31 March 2026 and every day since, that are not getting transitional relief or supporting small business relief. A property in rural rate relief or heat networks relief doesn't pay it either.
- Who doesn't: properties getting transitional relief (their increase is already being capped) or supporting small business relief, and new properties added to the list after 31 March 2026. A property formed by splitting or merging an existing one can still pay it.
- How it works: 1p is added to whichever multiplier applies, so 48p becomes 49p and 38.2p becomes 39.2p. It is added before reliefs and shown on the bill, and reliefs then work on the total including the supplement.
On an RV of £75,000 the supplement is £75,000 × 0.01 = £750 for the year. At the Budget on 28 October 2026 the government announced that the 1p supplement will continue in 2027/28 and 2028/29, subject to regulations.
Wales does not have this supplement.
In what order are business rates reliefs applied?
In England in 2026/27 the order is: improvement relief, transitional relief, other mandatory reliefs (such as small business, charitable and rural rate relief), then discretionary reliefs, starting with supporting small business relief and ending with pubs and live music venues relief and any locally funded relief.
Order matters because percentage reliefs work on whatever is left after the reliefs before them. Government guidance to councils for 2026/27 sets this sequence:
- Improvement relief: for 1 year, where qualifying improvements completed on or after 1 April 2024 (such as an extension, air conditioning or CCTV) increase the RV. The Valuation Office certifies it and your council works out the amount.
- Transitional relief: caps the year-on-year increase caused by the revaluation (see below). The council works this out first, and mandatory reliefs come off the capped figure.
- Other mandatory reliefs: such as small business rate relief, charitable rate relief (80%) and rural rate relief.
- Supporting small business relief (2026 scheme).
- Discretionary charitable, sports club and not-for-profit relief.
- Other centrally funded discretionary reliefs, including freeports relief.
- Pubs and live music venues relief: 15% of what is left after everything above.
- Other relief your council funds itself.
A few rules about how they combine:
- You can't get small business rate relief and charitable rate relief at the same time. Your council decides which applies.
- Pubs and live music venues relief can be combined with transitional relief or supporting small business relief.
- Because pubs relief comes after small business rate relief, it is 15% of a smaller figure where both apply, not 15% of the full amount.
- Empty properties don't get reliefs meant for occupied property, such as small business rate relief or pubs relief. Instead, empty property relief usually means no rates for the first 3 months (6 for industrial property), then full rates.
Wales: Food and Drink Hospitality Rates Relief (15%, capped at £110,000 per business across Wales) is applied to the bill left after mandatory reliefs such as small business rates relief and charitable relief.
How is small business rate relief calculated?
In England, a business with one property and an RV of £12,000 or less pays no business rates. Between £12,001 and £15,000 the relief tapers: at £13,500 it is 50%, at £14,000 about a third. In Wales, full relief runs to £6,000 and tapers to nothing at £12,000.
In England the law gets to the tapered figure by dividing the bill before relief by a number set from the RV: 3,000 ÷ (RV − £12,000), worked to three decimal places. In practice that gives a straight-line taper from 100% at £12,000 to 0% at £15,000.
| RV (England) | Sum | Relief |
|---|---|---|
| £12,000 or less | n/a | 100% (no rates to pay) |
| £13,500 | 3,000 ÷ 1,500 = 2.000, so you pay half | 50% |
| £14,000 | 3,000 ÷ 2,000 = 1.500, so you pay two thirds | About 33% |
| £15,000 or more | n/a | None |
The relief is usually only for a business with one property, although there are exceptions for small additional properties and a grace period after taking on a second one. The relief applies to the bill including the 1p supplement where that applies.
Wales: 100% up to an RV of £6,000, then tapering to nothing at £12,000. At £9,000 it is 50%. It is limited to two properties per business in each council area, and the property must be occupied.
How do transitional relief and supporting small business relief change the calculation?
They don't change the formula. They cap how much the bill can rise compared with last year. Transitional relief limits the increase by a percentage set by RV band. Supporting small business relief limits it to £800 or a percentage, whichever is greater, for those who lost certain reliefs at the 2026 revaluation.
Both are worked out by your council from your own bill history, so you can't fully reproduce them from the RV alone. What you can check is which cap you fall into.
Transitional relief (England)
| Rateable value | 2026/27 | 2027/28 | 2028/29 |
|---|---|---|---|
| Up to £20,000 (£28,000 in London) | 5% | 10% plus inflation | 25% plus inflation |
| £20,001 to £100,000 (£28,001 to £100,000 in London) | 15% | 25% plus inflation | 40% plus inflation |
| Over £100,000 | 30% | 25% plus inflation | 25% plus inflation |
The council applies it automatically and stops when the bill reaches the full amount set by the revaluation. Because transitional relief is applied first, other reliefs then come off the capped figure. If the Valuation Office gives you a transitional certificate, the certified value is used in the sum instead of the RV.
At the Budget on 28 October 2026 the government announced that, from 1 April 2027, qualifying retail, hospitality and leisure properties will have their transitional cap set at 0% plus inflation, subject to regulations.
Supporting small business relief (England)
If your bill rose at the 2026 revaluation and you lost some or all of your small business rate relief, rural rate relief, 2025/26 retail, hospitality and leisure relief or 2023 supporting small business relief, your 2026/27 bill can rise by no more than £800 or a percentage cap, whichever is greater: 5% (RV up to £20,000, or £28,000 in London), 15% (up to £100,000) or 30% (over £100,000). The comparison is with your 2025/26 bill after those reliefs.
GOV.UK's own example: a gift shop whose final 2025/26 bill was £4,491. 5% of that is about £225, which is less than £800, so the 2026/27 bill is capped at £4,491 + £800 = £5,291.
Wales
Wales has its own transitional relief for 2026: where a bill goes up by more than £300, the increase is phased in, with 33% of the extra paid in 2026/27 and 66% in 2027/28. Your council works it out.
Worked examples: how to work out business rates for 2026/27
Example: a warehouse in England with an RV of £75,000 that is not getting transitional relief pays (£75,000 × 0.48) + (£75,000 × 0.01) = £36,750 for 2026/27. The examples below show four different cases, with every step.
These are illustrations with made-up properties, not typical bills. Your council's bill is the real figure.
1. Warehouse, England, RV £75,000 (not retail, hospitality or leisure)
The property was in the rating list before April 2026 and its bill did not rise enough to get transitional relief, so the 1p supplement applies.
| Multiplier (RV £51,000 to £499,999, not RHL) | 48p |
| RV × multiplier | £75,000 × 0.48 = £36,000 |
| 1p supplement | £75,000 × 0.01 = £750 |
| Reliefs | None |
| Bill for 2026/27 | £36,750 |
2. Small shop, England, RV £13,500, the business's only property
A newly built unit added to the rating list after April 2026, so the 1p supplement does not apply.
| Multiplier (occupied RHL, RV under £51,000) | 38.2p |
| RV × multiplier | £13,500 × 0.382 = £5,157 |
| Small business rate relief | 3,000 ÷ (£13,500 − £12,000) = 2.000, so the bill is halved: − £2,578.50 |
| Bill for 2026/27 | £2,578.50 |
3. Pub, England, RV £40,000
Not getting transitional relief or supporting small business relief, so the 1p supplement applies. This shows the order: the supplement goes on first, then pubs relief comes off.
| Multiplier (occupied RHL, RV under £51,000) | 38.2p + 1p = 39.2p |
| RV × multiplier | £40,000 × 0.392 = £15,680 |
| Pubs and live music venues relief (15%) | £15,680 × 0.15 = − £2,352 |
| Bill for 2026/27 | £13,328 |
Without the supplement the same pub would be £40,000 × 0.382 = £15,280, less 15% (£2,292) = £12,988. The difference is the £400 supplement less the extra 15% relief on it (£60).
4. Cafe, Wales, RV £9,000, the business's only property
| Multiplier (cafes are not on the Welsh retail multiplier) | 0.502 |
| RV × multiplier | £9,000 × 0.502 = £4,518 |
| Small business rates relief: (£12,000 − £9,000) ÷ £6,000 = 50% | − £2,259 |
| Left after mandatory relief | £2,259 |
| Food and Drink Hospitality Rates Relief (15% of what is left) | £2,259 × 0.15 = − £338.85 |
| Bill for 2026/27 | £1,920.15 |
In Wales the hospitality relief has to be applied for through the council, by 31 March 2027 for 2026/27.
How are business rates worked out for part of a year?
Business rates are charged by the day. The law divides the yearly amount by the number of days in the financial year (365 in 2026/27), so if you are liable for only part of the year you pay for those days. When a relief starts or stops, the new amount usually applies from the day your circumstances changed.
In England the charge for each day is the RV × the multiplier ÷ the number of days in the financial year. The business rates year runs from 1 April to 31 March, and 1 April 2026 to 31 March 2027 is 365 days.
Taking the warehouse from example 1, if a new tenant became liable from 1 October 2026:
- Days from 1 October 2026 to 31 March 2027: 182
- Daily charge: £36,750 ÷ 365 = about £100.68
- Charge for the rest of the year: £36,750 × 182 ÷ 365 = about £18,325
The same daily approach is used when a relief changes. If a property stops qualifying for a relief, GOV.UK says you will usually pay the new amount from the day your circumstances changed, so tell your council about changes promptly to avoid a backdated bill. In Wales, from 1 April 2026 you must tell the council within 60 days when you become the ratepayer or when the property becomes occupied or empty, or you could be fined £500.
Councils send bills in February or March for the year ahead. Ask your council if you want to pay in instalments.
Will the calculation change in 2027/28?
The method stays the same, but England's multipliers change. At the Budget on 28 October 2026 the government announced 2027/28 multipliers of 39.5p and 44.5p for retail, hospitality and leisure, 44.7p and 49.7p for other property, and 52.5p for RV £500,000 or more, due from 1 April 2027 subject to regulations.
Other announced changes for England, due from 1 April 2027 and subject to regulations:
- The 1p transitional relief supplement continues in 2027/28 and 2028/29.
- Pubs and live music venues relief rises from 15% to 35% (staying at 15% for live music venues with an RV of £1 million or more).
- Small business rate relief thresholds rise to £18,000 (full relief), tapering to £21,000, for qualifying retail, hospitality and leisure property.
- Vape shops lose small business rate relief and the retail, hospitality and leisure multipliers. Adult gaming centres lose the retail, hospitality and leisure multipliers.
On the warehouse in example 1, the 2027/28 figure before the supplement would be £75,000 × 0.497 = £37,275. In Wales, the lower multiplier is due to extend to selected food and drink, visitor accommodation and leisure properties from 1 April 2027, with the rates set in the Welsh 2027-28 budget.
What if the rateable value in the calculation is wrong?
Every step after the first uses the rateable value, so an error in it carries all the way through to the bill. You can check and challenge it free through your business rates valuation account on GOV.UK, or a rating surveyor can do it for you.
Your council can explain the multiplier and reliefs on your bill, but it can't change the rateable value. That is set by the Valuation Office. If your property details look wrong, for example floor area, parking or how it's used, or similar properties nearby have lower values, the process is Check, then Challenge, then Appeal. You start with a check in your business rates valuation account. A changed value can go up as well as down, and a lower value could reduce your bill. There's no guarantee it will.
It may also be worth checking the bill itself against the steps on this page: is the property on the right multiplier, is the 1p supplement shown only if it applies, and are the reliefs you expect there? Questions about multipliers and reliefs go to your council.
You can do all of this yourself. Some businesses use a rating surveyor instead, because they know the valuation rules, local evidence and deadlines. Any fees are agreed directly with the surveyor. Our guide on how to challenge business rates explains each stage and the time limits.
Related guides
How business rates are calculated: frequently asked questions
How are business rates calculated?
Your council multiplies the property's rateable value by the multiplier for the year, then takes off any reliefs in a set order. In England in 2026/27, many properties also pay a 1p supplement added to the multiplier before reliefs.
How do I work out business rates myself?
Find your rateable value on your bill or on GOV.UK, choose the multiplier that matches your property, multiply the two, add 1p to the multiplier first if the transitional relief supplement applies in England, then take off any reliefs you qualify for. The business rates calculator on this site does the main steps for you.
What is the business rates multiplier for 2026/27?
In England it is 38.2p or 43p for occupied retail, hospitality and leisure property, 43.2p or 48p for other property depending on whether the rateable value is under £51,000, and 50.8p for any property with a rateable value of £500,000 or more. In Wales it is 0.350 for smaller shops, 0.502 standard and 0.515 above £100,000.
Why is my bill higher than rateable value times the multiplier?
In England in 2026/27 the most likely reason is the 1p transitional relief supplement, which applies to properties already in the rating list on 31 March 2026 that are not getting transitional relief or supporting small business relief. Other possible reasons include a different multiplier from the one you expected, or London's separate Business Rates Supplement. Your council can explain the lines on your bill.
Do I pay the 1p supplement if I get small business rate relief?
Possibly. The supplement is added before reliefs, and small business rate relief then works on the total. If your rateable value is £12,000 or less and you get full relief, you have nothing to pay either way. It doesn't apply if you are getting transitional relief or supporting small business relief.
Which business rates relief is applied first?
In England improvement relief comes first, then transitional relief, then other mandatory reliefs such as small business rate relief and charitable relief. Discretionary reliefs follow, starting with supporting small business relief, with pubs and live music venues relief applied after them and before any relief your council funds itself.
Can I get small business rate relief and charitable rate relief together?
No. You can't get both at the same time, and your council decides which one applies. Charitable rate relief is 80% in England and Wales, and the council may add discretionary relief on top.
How are business rates worked out if I move in part-way through the year?
Business rates are charged by the day, so you pay for the days you are liable. In England the daily charge is the yearly amount divided by the number of days in the financial year, which is 365 in 2026/27.
Does an empty property use the same multiplier?
In England, no for retail, hospitality and leisure property: the lower multipliers only apply to occupied property, so an empty shop is charged on 43.2p or 48p (or 50.8p from £500,000). In Wales the same multiplier applies whether the property is occupied or empty.
Is the calculation different in Wales?
The method is the same but the figures are not. Wales has three multipliers, small business rates relief that tapers to nothing at £12,000, a 15% food and drink hospitality relief capped at £110,000 per business, its own transitional relief, and no 1p supplement.
Is my rateable value the same as my rent?
No. It is the Valuation Office's estimate of the yearly open-market rent on a fixed date, 1 April 2024 for the current list, made on set assumptions. It can be higher or lower than the rent you actually pay.
Can I challenge the figures in my business rates calculation?
You can check and challenge your rateable value free through your business rates valuation account on GOV.UK, starting with a check. Questions about the multiplier or reliefs go to your council. A rating surveyor can handle the rateable value side for you if you prefer, with fees agreed directly with them.
Sources
We checked the facts on this page against these official sources on 11 November 2026:
- Estimate your business rates (GOV.UK)
- Business rates relief (GOV.UK)
- Business rates: pubs and live music venues relief, local authority guidance (GOV.UK)
- 5/2025: Confirmation of Budget package and the Non-Domestic Rating Multipliers for 2026/2027 (GOV.UK)
- 8/2026: Details of the Budget package and the multipliers for 2027/2028 (GOV.UK)
- Business rates in Wales (Business Wales)