Business rates, rather than council tax, are payable on non-domestic properties. The rates are worked out by applying the relevant multiplier to the property’s rateable value. However, there are a number of reliefs that are available which may reduce or eliminate the bill.

Multipliers

There are two multipliers – the small business multiplier and the standard multiplier. The small business multiplier applies to properties with a rateable value of less than £51,000 and the standard multiplier applies where the rateable value is £51,000 or more. The last revaluation took place on 1 April 2021 and the values at that date have been used to determine business rates for 2023/24 onwards.

For 2024/25, outside the City of London, the small business multiplier is 49.9 pence in the pound and the standard multiplier is 54.6 pence in the pound. In the City of London, a supplement of 1.8 pence in the pound applies, taking the small business multiplier to 51.7 pence in the pound and the standard multiplier to 56.4 pence in the pound.

For example, business rates of £32,760 would be payable on a property with a rateable value of £60,000 outside the City of London.

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Small business rate relief

Small business rate relief is available where the rateable value of the property is £15,000 or less.

No business rates are payable where the rateable value is £12,000 or less. Where the rateable value is between £12,000 and £15,000, the rate of relief tapers from 100% at £12,000 to 0% at £15,000. This means that 50% relief would be available for a property with a rateable value of £13,500, whereas properties with a rateable value of £14,000 would benefit from a reduction of one-third in their bill.

Transitional relief

Transitional relief caps the amount by which business rates can rise as a result of the revaluation which took effect from 1 April 2023.

For2024/25, the increase is capped at 10% plus inflation for properties with a rateable value of up to £20,000 (£28,000 in London), at 25% plus inflation for properties with a rateable value of £20,001 (£28,001 in London) to £100,000, and at 40% plus inflation for properties with a rateable value of more than £100,000.

Empty properties

If a property is empty, business rates are not payable for a period of three months. The relief starts from the date on which the property becomes empty. Once the period has elapsed, business rates are payable in full.

Some properties benefit from an extended period of empty property relief. For example, industrial premises, such as warehouses, benefit from an additional three months’ relief and no business rates are payable on an empty property with a rateable value of under £2,900 until they are occupied.

Following a consultation, the ‘reset period’ for empty property relief is increased from six weeks to 13 weeks (three months) from 1 April 2024. This is to prevent ‘box shifting’ whereby landlords repeatedly occupy properties for short periods to trigger more bouts of empty property relief. Once a property has benefited from empty property relief, it will need to be occupied for at least 13 weeks before any further empty property relief is available.

Other reliefs

There are a number of other circumstances in which business rates relief may be available. Details can be found on the Gov.uk website at Apply for Business Rate Relief.

Partner note: Local Government Finance Act 1988, Pt. III.