Business rates are a tax charged on most non-domestic properties, such as shops, offices, warehouses, and factories, to help fund council-run public services. Business Rates are calculated by the VOA (Valuation Office Agency) and reviewed every 3 years in line with the property’s ‘rateable value’.
Business rates are based on a subjective evaluation and therefore can be challenged if it is deemed that the business is overpaying. Understanding how business rates are calculated can help you understand if they are paying the correct amount.
In this article, the Business Rates team at RCK Partners explains exactly how business rates are calculated via applying the core formula, highlighting where businesses can identify savings or opportunities to appeal. This will help business owners calculate how the appropiate amount of Business Rates in which they should be paying.
The Rateable Value (RV) forms the foundation of a business rates calculation.
The Valuation Office Agency (VOA) determines the RV by assessing the annual rental value of a property at a fixed valuation date.
Assessments are based on a broad analysis of rental evidence, adjusted for size, location, property type, and mode or category of occupation.
For the 2023 Rating List, the antecedent valuation date (AVD) is 1 April 2021. This is the date that the Valuation Office are assuming the rental values from and therefore make up the 2023 Rateable Values.
It is important to note that the RV is a notional figure which is not necessarily reflective of the actual rent payable by the occupier.
Once established, the RV is applied to the Uniform Business Rate (UBR), also known as the multiplier, which is set annually by the government. There are also additions if your business is located in either Greater London or in the City of London.
For 2025/26 in England
Standard multiplier: 55.5p
Small business multiplier: 49.9p (applicable to properties with an RV below £51,000, subject to eligibility)
Example: A property outside of London with an RV of £100,000 under the standard multiplier produces a gross liability of:
£100,000 × 0.546 = £54,600 per annum.
The gross liability is often mitigated by the application of reliefs or exemptions, which can substantially reduce the payable amount. Examples include:
Small Business Rate Relief (SBRR) – for properties with low RVs
Retail, Hospitality and Leisure Relief – a sector-targeted relief currently offering up to 40% reduction in 2025/26
Charitable Reliefs – up to 80–100% reduction
Empty Property Relief – time-limited exemption for unoccupied premises.
Each relief is subject to strict qualification criteria, and eligibility should be reviewed carefully to ensure occupiers maximise available savings.
The business rates calculation basic formula can be summarised as:
Business Rates Payable = (Rateable Value × Multiplier)– Applicable Reliefs.
Understanding the calculation also highlights where opportunities may exist to reduce liabilities. Challenges most commonly arise in the following scenarios:
Material Changes in Circumstances (MCCs): Alterations to the property such as roadworks, access restrictions, or changes in local environment can justify a reduction in RV.
The Check Challenge Appeal (CCA) process gives occupiers the opportunity to formally review and dispute their property assessment. With the right advice and strong supporting evidence, it’s possible to achieve reductions in both current and future rates liabilities.
We encourage early communication with a Surveyor to for advice and to understand appropriate business rates liability for your property.
At RCK Partners, our team is experienced in Business Rates and can facilitate this conversation.
If you’d like to explore this, please contact us here or read more on our Business Rates webpage.
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