What are business rates, and why do they matter?
Business rates are a tax charged on most commercial properties in the UK — shops, offices, workshops, warehouses, salons, restaurants, and so on. They're calculated based on your property's "rateable value" (roughly, what it would cost to rent it annually) multiplied by a government-set figure called the multiplier.
For a typical small business, rates can run anywhere from a few hundred to tens of thousands of pounds a year. That makes them one of the most significant fixed costs a small business faces — and one of the most misunderstood.
The good news: the government offers substantial relief schemes that dramatically reduce or even eliminate rates bills for eligible businesses. The problem is that many businesses either don't know they qualify, haven't applied, or haven't had relief correctly applied to their account by their local council.
The key point: Business rates relief is not a grant you have to compete for. If you meet the criteria, you're entitled to it. Some relief is applied automatically; some you need to trigger by contacting your council. Either way, it's worth checking.
The main types of business rates relief
1. Small Business Rates Relief (SBRR) Up to £12,470/yr
This is the big one for most small businesses. If your property has a rateable value below £12,000, you pay zero business rates — 100% relief. If your rateable value is between £12,001 and £15,000, you get tapered relief that reduces gradually as the value rises.
To qualify:
- Your business must occupy a single property in England (different rules apply in Scotland, Wales and Northern Ireland — see below)
- That property must have a rateable value below £15,000
- If you have additional properties, their combined rateable value must be below £20,000
In most cases, SBRR is applied automatically by your council if you're registered. But it's worth checking your rates bill to confirm — errors do happen, particularly after moving premises or revaluations.
2. Retail, Hospitality and Leisure Relief (RHL) 40% off — up to £110,000
In 2025-26, the government extended 40% relief on business rates to businesses in the retail, hospitality and leisure sectors. This is on top of any SBRR you might already receive.
Who qualifies:
- Shops, supermarkets, market stalls
- Restaurants, cafés, pubs, takeaways
- Cinemas, music venues, theatres
- Gyms, spas, bowling alleys
- Hairdressers, beauty salons, nail bars
- Hotels and other overnight accommodation
Unlike SBRR, RHL relief does not apply automatically — your local council needs to apply it. If you're in one of these sectors and it's not showing on your rates bill, contact your council directly. This is one of the most commonly missed reliefs.
3. Charitable and Community Relief Up to 80% off
Registered charities automatically receive 80% relief on business rates. Community amateur sports clubs get the same. Local councils can also choose to award discretionary relief of up to 100% to charities and non-profit organisations — so it's worth asking even if you're not automatically entitled to the full amount.
4. Empty Property Relief
Rates are not charged on properties that have been empty for less than 3 months (6 months for industrial premises). After that, full rates apply — unless the property is listed, scheduled for demolition, or owned by certain types of organisations. If you're between tenants or waiting to fit out a new premises, this matters.
5. Rural Rate Relief Up to 100% off
If your business is the sole post office, general store, pub, or petrol station in a rural settlement of under 3,000 people, you may qualify for 100% rural rate relief. Councils can also award discretionary rural relief to other rural businesses — it's worth asking if you're based in a rural area.
What is rateable value — and what if it's wrong?
Your property's rateable value is set by the Valuation Office Agency (VOA) and is supposed to reflect the annual rental value of the property on the open market. It's not the same as what you actually pay in rent.
You can find your rateable value by:
- Checking your rates bill — it's listed there
- Searching on GOV.UK's "Find a business rates valuation" tool
- Asking your local council
Think your rateable value is too high? You can challenge it through the VOA's "Check, Challenge, Appeal" process. Many businesses successfully reduce their rateable value — and therefore their rates bill — particularly after significant local changes like new transport links, road closures, or changes in the area's character. It costs nothing to check.
How to make sure you're claiming the right relief
Find your rateable value
Check your rates bill or search your property on GOV.UK's business rates valuation tool. Note the figure — this determines whether you qualify for Small Business Rates Relief.
Check what relief is currently applied
Look at your most recent rates bill — it should list any relief that's been applied. If SBRR should apply (rateable value under £15,000, single property) but isn't showing, contact your council immediately.
Apply for any relief that's missing
Contact your local council's business rates team. Tell them you want to apply for Small Business Rates Relief, and — if you're in retail, hospitality or leisure — Retail, Hospitality and Leisure Relief. They'll tell you what evidence they need.
Check if your rateable value is correct
If you're just above a relief threshold (e.g., your rateable value is £12,500), it's worth checking whether the valuation is accurate. A successful challenge could push you into a more favourable relief band.
Check for additional local relief
Many councils run discretionary relief schemes beyond the national ones — particularly for businesses facing hardship or operating in areas undergoing regeneration. It's worth asking your council directly what's available.
Scotland, Wales and Northern Ireland
Business rates policy is devolved, so the rules are different outside England:
| Nation | Main scheme | Key threshold |
|---|---|---|
| Scotland | Small Business Bonus Scheme | 100% relief under £15,000 rateable value |
| Wales | Small Business Rates Relief | 100% relief under £6,000 rateable value |
| Northern Ireland | Small Business Rate Relief | 20% relief under £2m NAV; varies by sector |
| England | Small Business Rates Relief | 100% relief under £12,000 rateable value |
If you're in Scotland, Wales or Northern Ireland, the same principle applies — check what relief you're entitled to and make sure it's correctly applied to your account. Contact your local council or rates authority.
How much could this actually save me?
Here are three realistic examples of what business rates relief means in practice:
A sole trader plumber with a small workshop in Leeds (rateable value: £8,500) — qualifies for 100% Small Business Rates Relief. Standard rates bill without relief: approximately £4,300/year. With SBRR applied: £0. Annual saving: £4,300.
A hairdresser in Cardiff (rateable value: £14,000) — qualifies for tapered SBRR plus Retail, Hospitality and Leisure Relief. Standard bill: approximately £7,100/year. With both reliefs: under £1,500/year. Annual saving: over £5,600.
A restaurant in Manchester (rateable value: £48,000) — doesn't qualify for SBRR but gets 40% RHL Relief. Standard bill: approximately £24,200/year. With RHL applied: approximately £14,500/year. Annual saving: £9,700.
The key takeaway: Business rates relief isn't a minor discount — for many small businesses it's worth thousands of pounds a year. If you haven't actively checked your relief is correctly applied, there's a real chance you're overpaying.
Common mistakes that cost businesses money
Not checking when you move premises
Relief isn't automatically transferred when you move. If you've relocated in the last few years, your new premises may not have relief applied — even if you qualified at your old address.
Assuming the council has it right
Errors happen. Councils manage hundreds of thousands of accounts. If your rateable value has changed, if you recently took on an additional property, or if you've never specifically applied for SBRR, it may not be correctly applied.
Not knowing about RHL Relief
This is the most commonly missed relief. Because it doesn't apply automatically, retail, hospitality and leisure businesses frequently miss it entirely — despite being entitled to 40% off their bill.
Giving up after one call
Council business rates teams are often under-resourced. If you don't get a useful answer first time, persist. Ask in writing. Keep records of what you've claimed and when.
Frequently asked questions
Next steps
Business rates relief is one of the most valuable — and most consistently unclaimed — entitlements available to UK small businesses. The process of claiming it is straightforward once you know what you're looking for.
If you want to see the full picture of what your business is entitled to across all grant and relief schemes — not just rates — the GrantPath free checker covers 200+ schemes in under 3 minutes. The £49 full report then gives you exact amounts, eligibility detail and application guidance for each one.