How Do Business Rates Work?

Cat Pic

Catherine Tilke

Money Savings Advice How Do Business Rates Work?

Business rates are taxes charged on non-domestic properties in the UK. They’re applied to building such as shops, factories, warehouses, hotels and restaurants- basically, anything which isn’t somebody’s home.

The local council collects the money. Half is invested directly back into the community, and the rest is paid to the central government, where it is redistributed around the country in the form of grants.

Some buildings used for farming or charity received heavy discounts of up to 80%.

Business rates are calculated using a ‘multiplier set by the central government. In 2020 the standard multiplier was £0.54. There is a higher multiplier for more valuable properties.

The multiplier is applied to the ‘rateable value’ of a property, which is an estimate of how much a property could earn through rent in a year on the open market.

Businesses with a rateable value of less than £15,000 are sometimes eligible for tax relief.

So how do calculations look in practice?

Let’s imaging you have a shop with a rateable value of £12,000. The multiplier is £0.54.

12000 x 0.54 = £6480

Because your rateable value is less than £15,000, you may also be eligible for tax relief as a small business.

Money Savings Advice Author Catherine Tilke

Catherine Tilke

Catherine is our specialist financial news journalist. With over 7 years of experience and a raft of contacts in the financial world, she prides herself on delivering the most relevant and up-to-date financial news for our readers.

How does Money Savings Advice work

Money Savings Advice is an independent editorial company providing detailed information about numerous financial niches with the aim of helping consumers make informed financial decisions. We aim to provide hints, tips and techniques to help you make your money work for you. However, we are not perfect, and we accept no liability if anything we write about goes wrong.

  • The information detailed on Money Savings Advice does not constitute financial advice. It is always advised to do your own research to make sure the product/solution we write about fits your circumstances.
  • The aim of Money Savings Advice is to match you with a financial advisor, claims management company or another financial service company that can help you with your financial needs.
  • Money Savings Advice aim to provide the most up to date and accurate information about all financial subjects, and as such we sometimes link to other websites, but we (Money Savings Advice) can’t be responsible for their content.
  • Money Savings Advice is independent and not linked to any financial company.


Who are Money Savings Advice

Money Savings Advice is a trading name of RMM Digital Publishing Ltd. Registered trading address, First Floor, 85 Great Portland Street, London, W1W 7LT. Trading in England and Wales, company number 11550143 with data protection number ZA747669.

Back to top