Running a business in the UK often means navigating a maze of costs, regulations, and taxes. One recurring topic that confuses many is business rates. If you've ever asked yourself "Do I need to pay business rates?" or wondered how they differ from council tax, this guide is for you.
Business rates, sometimes referred to as non domestic rates, are a form of property tax charged on most non-domestic properties such as shops, offices, pubs, and warehouses. If you own or lease a commercial space, chances are you're liable to pay these charges.
According to the UK government, business rates help fund local services. These charges are based on the property’s "rateable value", determined by the Valuation Office Agency (VOA).
While council tax applies to residential properties, business rates apply to commercial ones. However, many new small business owners mistakenly believe they are the same. The key distinction lies in the type of property and usage.
There is no official council tax for businesses, but if you live in a business property (e.g., a shop with a flat above), you may be responsible for both.
Business rates England are overseen by the UK government but administered by local councils. The non domestic rates bill you receive depends on your property's rateable value, set during periodic revaluations.
Business rates UK policies apply similarly across England, Wales, and Northern Ireland, though Scotland has slightly different frameworks.
Wondering who sets business rates? The answer is a mix. The VOA calculates rateable values, while the government sets the multiplier, and local councils issue the bill and collect the payment.
Commercial rates is another term for non domestic business rates. They apply to any property not used entirely as a residence. Examples include warehouses, salons, and coworking spaces.
If you occupy a non-domestic property, yes. But there are exemptions and discounts available depending on property type, size, and usage.
Your rates payable might be reduced through schemes like Small Business Rate Relief, Rural Rate Relief, or charitable discounts.
If you're unsure how to define business rates for your space, start by checking your rateable value on the government’s business rates calculator.
Non domestic new business rates are property taxes charged on buildings that aren’t used solely as homes. These include offices, factories, and shops. They're calculated based on a rateable value set by the Valuation Office Agency and used to fund local services.
If your property is used solely for commercial purposes, you’ll pay business rates. If it's residential, it's council tax. If it’s mixed-use, you might need to pay both.
Understanding business rates helps you manage one of the key operational costs of running a business in the UK. Whether you're a first-time shop owner or expanding into new premises, staying informed is essential.
Still unsure where to begin? Get in touch with our team of business tax specialists for guidance tailored to your property.
