Business rates explained and how to reduce them
Business rates are one of the largest bills a business with premises pays, and one of the most misunderstood. You cannot switch them like energy, but you can often reduce them through the right reliefs or a correct rateable value. Here is how they work and where money is commonly left on the table.
How business rates are worked out
Business rates are a tax on most non domestic properties, such as shops, offices, warehouses, pubs and factories. Your bill is based on the property rateable value, which is the Valuation Office Agency estimate of its open market rental value on a set date, multiplied by a figure called the multiplier that the government sets each year. Your local council then applies any reliefs you qualify for and sends the bill.
Because the rateable value is an estimate tied to a past valuation date, it can be wrong, and because reliefs have to be claimed rather than applied automatically, many businesses pay more than they should. The two levers that reduce a rates bill are therefore a correct rateable value and every relief you are entitled to.
Rates rules, multipliers and relief thresholds change over time and vary across England, Scotland, Wales and Northern Ireland. Always check the current position for your property before acting.
Where businesses overpay on rates
Small business relief
Smaller premises may qualify for a large reduction, sometimes down to nothing, but only if the relief is claimed.
Sector reliefs
Retail, hospitality and leisure schemes come and go. Missing one that applies to you leaves money on the table.
Wrong rateable value
If the value is too high for the property as it is today, the whole bill is inflated until it is corrected.
Empty property
Vacant premises can attract relief for a period. Paying the full charge on an empty unit is a common error.
Changes not reported
Splitting, merging or altering a property can change its value. If it is not reflected, the bill is wrong.
Rogue reclaim firms
Some firms charge large fees to do what you can do yourself through the official Check Challenge Appeal service.
Common questions
Can I switch business rates like energy?
No. Rates are a tax, not a contract, so there is no supplier to switch. You reduce them by claiming the reliefs you are due and making sure your rateable value is correct.
How do I challenge my rateable value?
Through the Valuation Office Agency Check Challenge Appeal process. You can do it yourself for free rather than paying a reclaim firm a percentage.
Does OptiFlow Watch cover business rates?
Yes, as part of reviewing every bill your business pays. We flag where a relief may be missed or a value looks wrong so you know where to act.
What if my property is empty?
Empty premises can qualify for a period of relief. It is worth checking, because paying the full charge on a vacant unit is a frequent and costly mistake.
More from OptiFlow Watch
Check you are not overpaying on rates
Send us your rates bill and we will flag any relief you may be missing, alongside every other bill your business pays.