Business rates are the property tax on commercial premises — for many small businesses the second-biggest fixed cost after rent, and the one most owners overpay. The system changed more in 2026 than in any recent year: a full revaluation took effect in April 2026, England now has five multipliers instead of two, the old 40% retail, hospitality and leisure discount is now lower rates, and the Autumn Budget on 28 October 2026 announced more relief from April 2027. This guide explains how your bill is worked out, every relief you can claim, and what changes next April. It covers England; the devolved nations run their own schemes.
How your business rates bill is worked out
The formula is simple: rateable value multiplied by the multiplier, minus any relief. Your rateable value is set by the Valuation Office Agency (VOA) — an estimate of the annual rent your property could achieve on the open market, not the rent you actually pay. The 2026 revaluation reset values using rental evidence from 1 April 2024, and revaluations now happen every three years, the next in 2029. Check yours free on GOV.UK: if it is wrong, everything built on it is wrong.
The multiplier is the pence-in-the-pound rate set each year. Since 1 April 2026 there are five in England, depending on rateable value and whether the property qualifies as retail, hospitality or leisure:
| Multiplier | Rateable value | 2026/27 rate |
|---|---|---|
| Small business RHL | Under £51,000, RHL property | 38.2p |
| Small business | Under £51,000, other property | 43.2p |
| Standard RHL | £51,000–£499,999, RHL property | 43.0p |
| Standard | £51,000–£499,999, other property | 48.0p |
| High value | £500,000 and above | 50.8p |
If your rateable value is £50,999 or less with no other mandatory relief, the lower small business multiplier applies automatically. Rates sit alongside rent as a core occupancy cost — see our guide to the hidden costs of renting commercial property.
Small Business Rate Relief: the relief that wipes the bill out
Small Business Rate Relief (SBRR) is the most valuable scheme for small occupiers, and the most commonly missed. In England, a single property at £12,000 or less pays no business rates at all — 100% relief. Between £12,001 and £15,000 it tapers away, falling by 1% for every £30 of rateable value, to zero at £15,000. Above £15,000 there is no SBRR, though the lower small multiplier still applies up to £51,000.
Three conditions matter. First, the single-property rule: relief covers one main property, though you can keep it if extra properties each have a rateable value of £2,899 or less and the combined total stays under £20,000 (£28,000 in London). Second, the expansion grace period: taking on a second property keeps relief on the first for 12 months if acquired before 27 November 2025, or 36 months after. Third, SBRR cannot sit alongside charitable rate relief — the council decides which applies.
Most councils apply SBRR automatically, but errors happen. If your rateable value is under £15,000 and no relief shows on your bill, contact your council and apply — it is free, and once granted it normally stays in place.
Worked examples: what three small businesses actually pay
| Business | Rateable value | Gross bill (RV × multiplier) | Relief | You pay |
|---|---|---|---|---|
| Village shop, non-RHL | £11,000 | £4,752 (43.2p) | 100% SBRR | £0 |
| Café, RHL | £14,000 | £5,348 (38.2p) | 33.3% tapered SBRR | £3,565 |
| Small office, non-RHL | £40,000 | £17,280 (43.2p) | None — small multiplier applies | £17,280 |
The café shows the taper: at £14,000, relief is (£15,000 − £14,000) ÷ £3,000 = 33.3%, so £5,348 becomes £3,565. The office shows the other side: no SBRR above £15,000, but the 43.2p multiplier still saves £1,920 a year against the 48p rate.
Retail, hospitality and leisure: lower multipliers instead of a discount
If you run a shop, café, restaurant, pub, gym or hotel, your rates changed fundamentally in April 2026. The old Retail, Hospitality and Leisure relief — a 40% discount capped at £110,000 per business — closed to new claims in April 2026. Qualifying RHL properties now get permanently lower multipliers: 38.2p rather than 43.2p below £51,000, and 43p rather than 48p between £51,000 and £499,999. There is no claim form; your council decides who qualifies. Warehouses and back offices do not qualify, and the Autumn Budget 2026 removed RHL eligibility from adult gaming centres and vape shops.
Pubs get an extra layer: eligible pubs and live music venues receive 15% relief in 2026/27 on top of the lower RHL rate. A pub at £60,000 rateable value pays £25,800 at 43p, cut by 15% to £21,930 — against £28,800 at the ordinary 48p rate, a £6,870 saving. From April 2027 that relief rises to 35%.
Transitional relief and Supporting Small Business Relief
A revaluation can push a rateable value up sharply, and transitional relief phases the increase in. For 2026/27, annual increases are capped at 5% up to £20,000 (£28,000 in London), 15% for £20,001–£100,000, and 30% above £100,000. Supporting Small Business Relief adds a second cushion where a bill rose because relief was lost: the increase is capped at the greater of £800 or the percentage cap, for up to three years.
Suppose your rateable value rose from £18,000 to £25,000 at the revaluation. Your 2025/26 bill was £8,982 (£18,000 at the old 49.9p multiplier); the new gross bill is £10,800 (£25,000 at 43.2p), up 20.2%. The 15% cap band limits the rise to £1,347, so you pay £10,329 — £471 saved in 2026/27 alone. Budget for the capped figure: our guide to improving cash flow shows how to absorb a phased increase.
Other reliefs worth checking
Beyond SBRR and the RHL multipliers, several smaller reliefs are easy to miss. Charities and community amateur sports clubs get 80% mandatory relief. Rural rate relief gives 100% relief to the sole village shop, post office, pub, petrol station or pharmacy in a settlement of under 3,000 people. Empty properties pay no rates for three months after becoming empty — six months for industrial property. Hardship relief lets a council reduce a bill where payment would cause genuine hardship.
If your rateable value looks wrong, challenge it through the VOA’s Check, Challenge, Appeal process — check the facts, challenge with evidence such as comparable rents, and appeal to the Valuation Tribunal if needed. A successful challenge can cut your bill for years, and it is free to start.
What the Autumn Budget 2026 changes from April 2027
The Budget on 28 October 2026 made business rates the one measure aimed squarely at the high street; every change below starts on 1 April 2027. First, Small Business Rate Relief thresholds rise for qualifying retail, hospitality and leisure properties: full relief up to a rateable value of £18,000 instead of £12,000, tapering to nothing at £21,000 instead of £15,000. Around 70,000 more RHL businesses will pay nothing, and half of all RHL properties will pay no rates.
Second, relief for pubs, social clubs and all but the largest live music venues rises from 15% to 35% for 2027/28 and 2028/29. Third, RHL, pub and live music bills are frozen in real terms for two years, capped at CPI inflation, while the multipliers rise with it: for 2027/28, small business 44.7p, standard 49.7p, small RHL 39.5p, standard RHL 44.5p and high value 52.5p. Vape shops lose Small Business Rate Relief entirely from April 2027.
None of this changes what you pay before April 2027 — but if your RHL property is rated between £12,000 and £21,000, the changes could take your bill to zero, worth knowing before you sign a new lease. Our guide to negotiating a commercial lease explains how to use a known future cost change, and a lease renewal is the other natural moment to re-price.
Your seven-step checklist
1. Find your rateable value on GOV.UK. 2. Check your bill’s multiplier — 43.2p or 38.2p below £51,000. 3. Under £15,000 with no SBRR? Apply to your council today. 4. In retail, hospitality or leisure? Confirm the RHL multiplier. 5. Value jumped in April 2026? Check the transitional and Supporting Small Business caps. 6. Pub or live music venue? Confirm the 15% relief; diarise 35% from April 2027. 7. RHL property at £12,000–£21,000? Mark 1 April 2027 — your bill may fall to nothing.
Frequently asked questions
Do I pay business rates if I work from home?
Usually not — unless part of the home is used exclusively for business, such as a room set aside solely as an office, in which case the VOA may rate that part separately.
Is Small Business Rate Relief automatic?
The lower small business multiplier is applied automatically. The relief itself is applied automatically by most councils, but not all — check your bill and apply to your council if it is missing. It is free and normally stays in place.
What if my rateable value is wrong?
Use the VOA’s Check, Challenge, Appeal process on GOV.UK: correct factual errors first, then challenge with comparable rents as evidence. A successful challenge can cut your bill for the rest of the rating list.
Related reading
For the wider costs of taking premises, read our guide to the hidden costs of renting commercial property. If you are still negotiating, our guide to negotiating a commercial lease will help, and our guide to lease renewal and security of tenure covers the other moment occupancy costs can be reset. Our guide to improving cash flow shows how to absorb a phased increase.