What Are Business Rates? The Latest Updates in 2025

Business rates?

They’re one of those things most small business owners dread. A confusing tax that seems to sneak up on you, eat into your profits, and leave you scratching your head.

But here’s the thing: understanding business rates isn’t just about compliance—it’s about saving money. Thousands of pounds, in some cases.

And with 2024 bringing new changes to multipliers, relief schemes, and rateable values, there’s never been a better time to get clued up.

So, whether you’re running a cozy café, a bustling office, or even working from home, this guide will break down everything you need to know about business rates—without the jargon or headaches.

Let’s dive in.

What Are Business Rates?

Business rates, also known as non-domestic rates, are a tax on properties used for business purposes in the UK. If you operate from a shop, office, warehouse, or even a holiday rental, you’ll likely need to pay them.

Here’s why they matter:

• What are they for? The money collected funds local services like roads, schools, waste collection, and street lighting.
• Who pays? Anyone using a property for business, whether you own it or rent it.
• What properties are included? Shops, offices, pubs, warehouses, factories, and holiday rentals used for more than 140 days a year.

In short, business rates are a key part of running a business in the UK. Understanding them helps you budget better and avoid surprises.

How Are Business Rates Calculated?

Let’s get straight to the point: 

Business rates aren’t just plucked out of thin air. They’re calculated using two key numbers:

• Your property’s Rateable Value (RV) 
• And the multiplier. 

Here’s how it works:

1. Rateable Value (RV)

This is the Valuation Office Agency’s (VOA) estimate of how much your property could rent for on the open market. Think of it as the “rental potential” of your space. The VOA reassesses this value every few years to keep it in line with market trends.

To find your RV, you can check the VOA’s website. It’s like looking up your property’s “business rating.”

2. The Multiplier

This is the percentage set by the government that’s applied to your RV to calculate your bill. There are two types:

• Standard multiplier: For properties with an RV of £51,000 or more.
• Small business multiplier: For properties with an RV under £51,000 (because the government likes to cut small businesses some slack).

For 2024/25, the multipliers are:

• Standard multiplier: 54.6p
• Small business multiplier: 49.9p

How It All Adds Up ( A Real-Life Example )

Let’s say you run a small café with an RV of £20,000. Since your RV is under £51,000, you’ll use the small business multiplier.

Here’s the math:

• RV: £20,000
• Small business multiplier: 49.9p (or £0.499)

Your annual business rates bill would be:
£20,000 x £0.499 = £9,980

But wait, there’s more. If you qualify for Small Business Rate Relief, you could slash that bill even further. (More on that later.)

Multipliers Over the Years

Here’s a quick look at how multipliers have changed:

Why This Matters

Understanding how business rates are calculated isn’t just about numbers. it’s about saving money. By knowing your RV and which multiplier applies, you can:

• Plan your budget better.
• Spot errors in your bill.
• Unlock potential relief to reduce your costs.

In short, it’s your secret weapon to staying in control of your business finances.

Who Needs to Pay Business Rates?

Here’s the deal: if you’re using a property for business in the UK, you’re probably on the hook for business rates. But it’s not always black and white. Let’s break it down so you know exactly where you stand.

Who’s Responsible?

Property occupiers:  If you’re running a business from a property, whether you own it or rent it, you’re usually the one paying business rates.

Property owners: If the property is empty, the owner typically pays (but there are exceptions, more on that later).

Who’s Off the Hook?

Not every property gets hit with business rates. Here are the main exceptions:

Agricultural land and buildings: Farms and forestry properties are exempt.

Charities: Properties used for charitable purposes can get up to 80% relief.

Religious buildings: Places of worship are exempt.

Small businesses: If your property’s Rateable Value (RV) is under £12,000, you could pay nothing. Between £12,001 and £15,000, the relief tapers off.

What About Working From Home?

This is where it gets interesting. If you’re a freelancer or small business owner working from your living room, you’re usually in the clear. But there are exceptions:

• If you’ve turned part of your home into a dedicated office or workspace, you might need to pay business rates on that portion.
• If customers visit your home for services (like a hair salon or therapy sessions), you could be liable.
• If you’re storing goods for sale at home, that could also trigger business rates.

Mixed-Use Properties

Do you have a shop with a flat above it? Or a café with a residential space? 

In these cases, you’ll pay business rates on the commercial part and council tax on the residential part. It’s split fairly, but it’s something to keep in mind.

Empty Properties

If your property is empty, you might get a break—but not forever. Most properties get a 3-month exemption from business rates. After that, you’ll need to pay the full amount unless you qualify for an extended exemption (e.g., industrial properties or listed buildings).

Why This Matters

Knowing who needs to pay and who doesn’t can save you a lot of money. It’s not just about avoiding penalties; it’s about spotting opportunities for relief or exemptions that could lower your costs.

So, whether you’re running a bustling shop, a cozy home office, or an empty warehouse, understanding your responsibilities is the first step to staying compliant and keeping more cash in your pocket.

Business Rates Relief and Exemptions

Business rates can feel like a heavy burden. But here’s the good news: There are ways to lighten the load.

The UK government offers several relief schemes that can slash your bill and, in some cases, wipe it out completely.

Here’s your cheat sheet to the most important relief options:

1. Small Business Rate Relief (SBRR)

If you’re a small business, this one’s for you.

Who’s eligible? Businesses with a Rateable Value (RV) under £15,000.

How much can you save?

• If your RV is £12,000 or less, you pay nothing.
• If your RV is between £12,001 and £15,000, the relief tapers off. For example, an RV of £13,500 could get you a 50% discount.

Bonus: Even if you don’t qualify for full relief, you’ll still pay using the lower small business multiplier.

2. Rural Rate Relief

Running a business in a small village? You might be in luck.

Who’s eligible? Businesses in rural areas with a population of 3,000 or less.

What’s covered?

• The only shop, post office, or pub in the village.
• Properties with an RV under £8,500 (shops) or £12,500 (pubs).

How much can you save? Up to 100% relief.

3. Charitable Rate Relief

If your business has a charitable purpose, you could score big savings.

• Who’s eligible? Charities and community amateur sports clubs (CASCs).
• How much can you save? Up to 80% relief, and in some cases, even 100%.
• Example: A charity-run thrift shop or a local sports club could qualify.

4. Retail, Hospitality, and Leisure Relief

This one’s a lifeline for businesses in these sectors.

Who’s eligible? Pubs, restaurants, shops, hotels, and leisure venues.

How much can you save?

• 75% off your bill for 2023/24 and 2024/25.
• Capped at £110,000 per business per year.

Why it matters: If you’re running a café, boutique, or gym, this relief could save you thousands.

2025 Business Rates Updates: What You Need to Know

In 2025, business rates will see key changes:

• Multiplier freeze: The small business multiplier stays at 49.9p, but the standard multiplier rises to 54.6p, impacting properties with an RV over £51,000.
• Extended relief: The 75% discount for retail, hospitality, and leisure sectors continues, capped at £110,000 per business.
• Transitional relief: Limits annual bill increases to 5%-30%, easing the impact of RV revaluations.
• Empty property rules: To reset the 3-month exemption, properties must now be occupied for 13 weeks (up from 6).

What it means for you:

• Small businesses with an RV under £51,000 avoid multiplier hikes.
• Retail and hospitality sectors save big with extended relief.
• Plan ahead to manage potential cost increases.

Stay informed, explore relief, and keep your business thriving.

5 Tips for Managing Business Rates

Business rates might seem like just another bill, but with a little planning, you can handle them like a pro. Here’s how to stay on top of your business rates without the stress:

1. Budget for your business rates. 

They’re a big expense, so it’s smart to set aside money each month. When the bill arrives, you’ll be ready to pay without scrambling for cash. Think of it as saving for a rainy day—except this one’s predictable.

2. Pay on time

Late payments can lead to penalties, and nobody wants that. Mark your calendar for payment deadlines, and consider spreading the cost with monthly payments if your council allows it. Staying on time keeps your finances smooth and avoids unnecessary fees.

3. Check your Rateable Value (RV).

 If your RV seems too high, you could be overpaying. Use the VOA’s website to check your RV, and if it’s wrong, appeal it. A lower RV means a lower bill, and that’s always a win.

4. Relief options. 

There are schemes like Small Business Rate Relief and Retail Relief that can save you thousands—if you know about them. Regularly check your council’s website for updates, because you might qualify for a discount or even pay nothing at all.

5. Plan for future increases 

Business rates can go up, so it’s smart to keep an eye on government updates and factor potential increases into your budget. Planning ahead means no nasty surprises down the road.

The bottom line? Managing business rates doesn’t have to be hard. With a little preparation and some smart moves, you can stay in control of your costs—and keep more money in your business.

Conclusion

Understanding business rates isn’t just about compliance, it’s about saving money and staying in control of your finances. 

From knowing how rates are calculated to exploring relief options, every small step can make a big difference to your bottom line.

Don’t let business rates catch you off guard. 

Take action today: Check your rateable value on the gov.uk website, explore relief schemes, and stay updated on changes. A little effort now can save you thousands later.

Your business deserves every chance to thrive, so start managing your business rates like a pro today.