What are business rates? What you pay and who's responsible

Understanding business rates is essential for anyone occupying or owning commercial property in the UK. Knowing what business rates pay for, how they’re calculated, and who is responsible can feel complex. Whether you’re searching for information on how business rates are calculated, wondering if landlords or tenants are liable, or exploring relief options for charities, this guide breaks down everything you need to know.

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Business Rates explained

What are business rates?

Business Rates are tax paid in respect of commercial/ non domestic property. Commercial property business rates pay for essential public services such as schools, emergency services, and local infrastructure.

Understanding business rates calculations: three factors that matter

How are business rates calculated?

Whether you're moving to a new commercial property or questioning a recent bill, understanding your business rates starts with three key components: your property's rateable value (the estimated annual rental value), the government-set multiplier applied to that value, and any reliefs or supplements that may increase or decrease what you ultimately pay. Learn more about each component below.

1. Rateable Value – This is the annual rent that a hypothetical tenant would be prepared to pay at a fixed valuation date. 
2. Multipliers – The rate-in-the-pound of rateable value. That is applied to calculate the rate liability. The multipliers are reset at each revaluation. They are then increased by the rate of inflation annually.  
3. Several other supplements and reliefs are set by the government or applied at a discretionary level by the billing authority which can either discount or increase the liability.

Who pays commercial property business rates: Landlord or tenant?

Who pays business rates: landlord or tenant?

Responsibility for commercial business rates typically falls on the occupier, but circumstances like vacant properties and specific lease agreements can shift liability - here's how it works.

The commercial occupier whether freehold or leasehold pays business rates on the demise they occupy. They can also be eligible for empty rate relief if they vacate the space. 

If the property is empty and handed back to the landlord, the landlord may become eligible for empty rate relief. There are instances where landlords pay their tenants' rates on rate-inclusive agreements.

Where can I find a business rates calculator?

Where can I find a commercial business rates calculator?

HMRC has a simple commercial business rates calculator to help you estimate how much business rates you will need to pay. For large, complex or multi-property portfolios, our can calculate business rates for you ensuring you are paying the correct amount for your assets.

Business rates for charities, do they apply and how much?

Do charities pay business rates?

If your charity occupies property in the UK, you may be eligible for commercial business rates relief - potentially reducing your operational costs and freeing up funds for your mission-critical work.

Registered Charities get 80% relief on business rates if the property is used for charitable purposes. Local councils can grant up to 100% relief at their discretion.

Business rates can significantly impact your property costs, but understanding your liability, exploring available reliefs, and ensuring accurate valuations can lead to substantial savings. Whether you're expanding operations, managing a portfolio, or navigating rate appeals, our commercial business rates specialists are here to help you optimise your business rates strategy and keep your occupancy costs under control.