How to Calculate Business Rates in the UK?

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Knowing how to calculate business rates is important when budgeting for a shop, office, warehouse, restaurant or other commercial premises.

The calculation itself starts with a simple formula, but the amount you actually pay can change once the correct multiplier, business rates relief and revaluation adjustments are taken into account.

For the 2026/27 financial year, the calculation has become particularly important because new rateable values took effect from 1 April 2026 and England moved from two main business rates multipliers to five.

Qualifying retail, hospitality and leisure properties now also have permanently lower multipliers rather than the previous temporary sector relief.

For most businesses in England, the starting calculation is:

Rateable Value × Business Rates Multiplier = Business Rates Before Relief

You then account for any relief, transitional protection or other adjustment that applies to the property.

How to Calculate Business Rates in 2026/27?

The fastest way to estimate business rates is to work through four pieces of information in the correct order.

Find the current rateable value of the property
Identify the correct multiplier
Multiply the rateable value by the multiplier
Apply any reliefs and billing adjustments

For example, if an office in England has a rateable value of £60,000 and qualifies for the 48p standard non-RHL multiplier:

£60,000 × 0.48 = £28,800

The basic annual business rates liability is therefore £28,800 before reliefs, supplements and other adjustments.

Businesses can compare their own calculation with the official business rates estimator provided through GOV.UK.

The important point is that £28,800 is the starting charge rather than necessarily the exact figure that will appear on the final council bill.

Start With Your Property’s Rateable Value

Business rates are not normally calculated using the rent you currently pay your landlord. Instead, the calculation uses the property’s rateable value, commonly shortened to RV.

The Valuation Office Agency determines rateable values for non-domestic properties in England and Wales.

For the 2026 rating list, rateable values generally reflect the property’s estimated annual open-market rental value on 1 April 2024. The new valuations took effect on 1 April 2026.

This means a property currently renting for £30,000 a year does not automatically have a £30,000 rateable value.

Factors affecting the valuation can include the property’s:

Location
Size and layout
Property type
Use
Rental evidence
Parking or other facilities
Characteristics compared with similar premises

Businesses wanting to understand how the valuation itself is determined should examine their VOA business rates information before relying solely on the figure shown on a council bill.

If the VOA property details are wrong, the resulting business rates calculation may also be wrong.

Which Business Rates Multiplier Should You Use in England?

This is where many older business rates calculations become inaccurate.

From 1 April 2026, England uses five multipliers. The correct one depends primarily on the property’s rateable value and, for properties below £500,000 RV, whether the property qualifies as retail, hospitality or leisure.

Property Type	Rateable Value	2026/27 Multiplier
Retail, Hospitality or Leisure	Below £51,000	38.2p
Other Business Property	Below £51,000	43.2p
Retail, Hospitality or Leisure	£51,000 to £499,999	43.0p
Other Business Property	£51,000 to £499,999	48.0p
Any Property	£500,000 or More	50.8p

The multiplier is expressed as pence for every £1 of rateable value.

Therefore:

38.2p becomes 0.382
43.0p becomes 0.43
43.2p becomes 0.432
48.0p becomes 0.48
50.8p becomes 0.508

The government provides further details on how business rates are calculated, including how rateable values and multipliers interact.

What Counts as Retail, Hospitality or Leisure?

Qualifying properties can include businesses such as shops, cafés, restaurants, bars, pubs, cinemas, music venues, gyms, spas and hotels.

However, businesses should not assume that being broadly connected with one of these industries automatically gives the property the lower multiplier.

Eligibility depends on how the property is occupied and whether it meets the government’s qualifying rules. The local council is responsible for applying the correct multiplier to the business rates bill.

Worked Business Rates Calculations

Looking at several property types makes the calculation easier to understand.

Example 1: Small Office With a £10,000 Rateable Value

Suppose a small consultancy occupies one office in England with an RV of £10,000.

It is not a retail, hospitality or leisure property, so the 43.2p multiplier is the starting point.

£10,000 × 0.432 = £4,320

The gross charge is £4,320.

However, if this is the business’s only property, an RV of £10,000 falls within the range for 100% Small Business Rate Relief.

The amount payable could therefore fall to £0, subject to eligibility.

Example 2: Café With a £40,000 Rateable Value

A qualifying café has a rateable value of £40,000. Because it is an eligible retail, hospitality or leisure property below £51,000, the 38.2p multiplier applies.

£40,000 × 0.382 = £15,280

Its basic annual charge is therefore £15,280 before other adjustments. This example demonstrates why simply using the standard small-business multiplier would give the wrong result.

Using 43.2p instead would produce £17,280, a difference of £2,000 before other adjustments.

Example 3: Office With a £90,000 Rateable Value

An office has an RV of £90,000 and is not an RHL property. The applicable multiplier is 48p.

£90,000 × 0.48 = £43,200

The gross annual liability is £43,200.

Example 4: Hotel With a £200,000 Rateable Value

Assume a qualifying hotel has an RV of £200,000.

The standard retail, hospitality and leisure multiplier is 43p.

£200,000 × 0.43 = £86,000

The starting annual charge is £86,000.

Without the RHL multiplier, applying 48p would have produced a starting figure of £96,000.

Example 5: Large Warehouse With a £550,000 Rateable Value

Once the rateable value reaches £500,000, the high-value multiplier applies irrespective of whether the premises would otherwise fall within an RHL category.

For an RV of £550,000:

£550,000 × 0.508 = £279,400

The basic annual business rates charge is £279,400 before reliefs or adjustments.

Do Not Forget the Temporary 1p Supplement in 2026/27

One of the easiest 2026/27 calculation details to miss is the Transitional Relief Supplement.

For the financial year beginning 1 April 2026, a temporary 1p supplement applies to the relevant multiplier for ratepayers who do not receive Transitional Relief or Supporting Small Business Relief. The measure is being used to partially fund the redesigned transitional relief system and applies for one year.

For example, if the underlying multiplier is 48p, a business subject to the supplement effectively has an additional:

Rateable Value × 0.01

A property with an RV of £60,000 would therefore have a £600 supplement:

£60,000 × 0.01 = £600

This is one reason a manual RV × headline multiplier calculation may not exactly match the amount on the council bill.

Businesses receiving Transitional Relief or Supporting Small Business Relief are not charged the supplement in the same way.

How Small Business Rate Relief Changes the Calculation?

Having an RV below £51,000 does not automatically mean the business receives Small Business Rate Relief.

The £51,000 threshold determines whether the lower small-business multiplier can apply to a non-RHL property.

Small Business Rate Relief has separate thresholds.

In England, a business may qualify when its property has a rateable value below £15,000 and it generally occupies only one property.

Rateable Value	Small Business Rate Relief
£12,000 or Below	100% Relief
£12,001 to £15,000	Relief Gradually Reduces
Above £15,000	No SBRR Under the Main Threshold

A business occupying one property with an RV of £12,000 or below can therefore have its eligible business rates liability reduced to zero.

How the Taper Works?

Between £12,001 and £15,000, the amount of relief gradually decreases. For example, a property with a rateable value of £13,500 receives 50% Small Business Rate Relief.

If it is a non-RHL property, its starting calculation is:

£13,500 × 0.432 = £5,832

Applying 50% SBRR gives:

£5,832 × 50% = £2,916

Other billing adjustments may still affect the final amount.

There is also an important change for growing businesses. Where a qualifying business takes on a second property on or after 27 November 2025, it can keep relief on its existing main property for up to 36 months, rather than the previous 12-month grace period, subject to the scheme’s conditions.

That makes the interaction between business rates and expansion particularly important for startups moving from one location to several.

Why Your Business Rates Bill May Not Match Your Calculation?

A manual calculation is useful for budgeting, checking a lease or spotting an unexpectedly high bill, but it should still be treated as an estimate. Your council’s figure may be different because several calculations can sit between the headline multiplier and the final liability.

The 2026 Revaluation Changed the Rateable Value

The latest revaluation came into effect on 1 April 2026. Even though several headline multipliers fell compared with 2025/26, that does not automatically mean every business pays less. A property’s rateable value may have increased at the same time.

For example:

Old RV: £50,000
New RV: £70,000

A lower multiplier may partly offset the increase, but the business could still face a higher bill depending on its circumstances.

The government itself notes that the effect of revaluation depends on the interaction between the property’s updated RV and the new tax rate.

Transitional Relief May Limit a Sudden Increase

Transitional Relief protects some businesses from immediately facing the full increase caused by a revaluation. For 2026/27 in England, increases caused by revaluation are subject to different caps depending on property size.

Rateable Value	Maximum 2026/27 Increase From Revaluation
Up to £20,000, or £28,000 in London	5%
£20,001 to £100,000, or above £28,000 in London	15%
Above £100,000	30%

Different caps apply in later years of the transitional scheme. Eligible adjustments are normally made automatically by the council.

Supporting Small Business Relief Can Also Apply

The Supporting Small Business scheme can help businesses whose bills rise because they lose some or all of certain existing reliefs following the 2026 revaluation.

For 2026, annual increases for qualifying businesses are restricted using the higher of £800 or the applicable transitional relief cap.

The scheme has also been expanded to include certain businesses losing the former Retail, Hospitality and Leisure Relief as the sector moves to the new lower multipliers.

Local Charges Can Affect the Bill

The headline England multipliers do not necessarily represent every charge appearing on every business rates bill.

For example, different arrangements can apply in the City of London, while some properties can face local supplements.

Always use the multiplier and adjustments shown by the relevant billing authority when checking the final payment.

Should You Calculate Business Rates Before Taking a Commercial Property?

Yes.

Business rates can materially change the real occupancy cost of premises.

Suppose two offices have similar rents:

Property	Annual Rent	Rateable Value	Example Gross Rates
Office A	£30,000	£40,000	£17,280
Office B	£32,000	£25,000	£10,800

Examples use the 43.2p non-RHL small-business multiplier before reliefs and other adjustments.

Office A appears cheaper when comparing rent alone, but its potential property-tax cost is significantly higher.

Before signing a lease, businesses should therefore check:

The current rateable value
Whether a 2026 valuation is being used
The correct property classification
The applicable multiplier
Available relief
Whether business rates are included in rent or service charges
Whether the property has been altered or subdivided
Any pending valuation issue

This is particularly useful for startups comparing a traditional lease with serviced offices, coworking premises or shared commercial space.

What If You Think the Rateable Value Is Wrong?

Do not try to solve a valuation problem simply by changing the multiplier in your calculation.

The multiplier is set under the business rates system. The underlying rateable value comes from the valuation of the property.

If details such as floor area, use, parking or other property information are incorrect, businesses can review the information held about the property and challenge the valuation where appropriate. GOV.UK states that property changes can also be reported through a business rates valuation account.

Keep evidence such as:

Lease documents
Rental information
Floor plans
Details of alterations
Property photographs
Evidence about comparable premises

A reduced rateable value can affect more than the initial multiplication. It may also move a property into a different multiplier band or change eligibility for relief.

How Are Business Rates Calculated Across the UK?

The basic principle of rateable value × tax rate, followed by reliefs, exists across the UK, but there is no single UK-wide multiplier.

Businesses should calculate the bill using the rules for the nation where the property is located.

England

England uses the five-multiplier structure outlined above for 2026/27, ranging from 38.2p for qualifying smaller RHL properties to 50.8p for properties with an RV of £500,000 or more.

Wales

Wales introduced three multipliers from 1 April 2026:

35.0p retail multiplier for qualifying shops with an RV below £51,000
50.2p standard multiplier for most other properties
51.5p higher multiplier for properties with an RV above £100,000

Reliefs are then applied where eligible.

Scotland

Scotland refers to business rates as non-domestic rates and uses a poundage system.

For 2026/27:

48.1p applies to properties with an RV up to £51,000
53.5p applies from £51,001 to £100,000
54.8p applies above £100,000

Reliefs and other adjustments can then reduce the liability.

Northern Ireland

Northern Ireland calculates non-domestic rates differently. The bill is based on a combination of a regional rate and a district rate, meaning the applicable poundage depends on the council area.

For 2026/27, the non-domestic regional rate is 0.307900, with the relevant district rate added to calculate the total rate poundage.

Parking or other facilities
Parking or other facilities

This makes it particularly important not to apply an England multiplier to commercial premises elsewhere in the UK.

A Simple Checklist Before Accepting Your Business Rates Figure

Before budgeting around a calculated figure, verify three things.

First, check the rateable value: Make sure you are using the current 2026 rating list rather than an older valuation.
Second, check the multiplier: For England, consider both the property’s RV and whether it qualifies as retail, hospitality or leisure.
Third, check the adjustments: Reliefs, transitional arrangements, the temporary 2026/27 supplement and local charges can all affect the final bill.
A useful calculation therefore looks more like:

Rateable Value × Correct Multiplier + Applicable Supplements − Eligible Reliefs and Adjustments = Estimated Amount Payable

The council bill remains the final figure to check against because some adjustments are property-specific.

Final Thoughts

Learning how to calculate business rates gives a business owner a much clearer picture of the real cost of commercial property.

For 2026/27, businesses in England should first find the property’s updated rateable value, select the correct one of the five multipliers and calculate the gross liability.

They should then check Small Business Rate Relief, transitional protection, Supporting Small Business Relief and the temporary 1p supplement before treating the estimate as the final amount.

For businesses comparing new premises, that calculation should happen before signing the lease, not after the first rates bill arrives.

FAQs

How Do I Calculate Business Rates in England?

Find your property’s current rateable value, multiply it by the appropriate 2026/27 multiplier, then account for any relief, transitional adjustment or applicable supplement.

What Is the Business Rates Multiplier for 2026/27?

England has five multipliers in 2026/27. They are 38.2p and 43p for qualifying RHL properties below £500,000 RV, 43.2p and 48p for other properties below £500,000, and 50.8p for properties worth £500,000 or more.

Is Rateable Value the Same as My Annual Rent?

No. Rateable value is a valuation used for business rates purposes and does not necessarily equal the rent currently being paid under the lease.

Can a Business With an RV Below £51,000 Pay No Business Rates?

Possibly, but the £51,000 threshold alone does not provide 100% relief. In England, qualifying businesses occupying one property with an RV of £12,000 or below can generally receive 100% Small Business Rate Relief.

What Happens If My Rateable Value Is £13,500?

A qualifying business occupying one property can receive 50% Small Business Rate Relief at an RV of £13,500. The underlying charge is calculated first and the relief is then applied.

Do Retail and Hospitality Businesses Still Receive the Old RHL Relief?

The previous Retail, Hospitality and Leisure Relief ended for new claims from 1 April 2026 in England. Qualifying properties below £500,000 RV instead benefit from permanently lower RHL multipliers.

Why Is My Council Bill Higher Than My Manual Calculation?

Possible reasons include the temporary 1p Transitional Relief Supplement, local supplements, a different rateable value, property-specific adjustments or incorrect assumptions about relief eligibility.