How to dramatically reduce your business rates in 8 easy steps

Owning a small business – or any business for that matter – is getting increasingly tough in the face of increasing energy prices, rising inflation, and a cost of living crisis to boot!

These increasing costs can make paying business rates a struggle for many and nearly impossible for some businesses in the UK.

But what many business owners need to know is how to reduce business rates or (if your property is vacant) not pay business rates altogether, so you can minimise overheads and maximise profit.

And it doesn’t have to be complicated.

Follow our 8-step guide to reducing your business rates below, and thank us for that extra chunk of change in your business wallet later!

Let’s get started.

Firstly, what are business rates?

If your business rates management was previously in the hands of someone else or you’re a new business owner, you might be wondering what business rates actually are. Let us break it down for you.

Business rates are essentially a mandatory tax that you need to pay when you rent a commercial property. Your business rate tax can cost half of – or even as much as – your overall yearly rent!

How are business rates calculated in the UK?

Rates for businesses are determined by a multiplier which is based on your commercial property’s rateable value. One is for small businesses, and the other multiplier is for larger companies.

UK multipliers

The multipliers for most of the UK 2023-2024 are 51.2 pence for businesses with a rateable value of £18,000 or above and 49.9 pence for small businesses with a rateable value of below £18,000.

London multipliers

The multipliers for Greater London are 52.4 pence for businesses with a rateable value of £25,500 or above and 51.1 pence for small businesses with a rateable value of below £25,500

To calculate your business rates, you’ll need to multiply your rateable value (this rateable value figure is based on property valuation – check your local valuation office website to estimate this) by the best-suited multiplier.

Why you need to check your business rates now, not later

If you want to lower your business rates bills, then you must take action fast. This is because the last date to claim refunds on business rates bills is 31.03.23, and if you don’t claim your tax rebates by then, you could miss out on thousands of pounds in savings!

How to reduce your business rates bills- step by step

Now that you understand what business rates are, how they are calculated, and why you must assess your rates bills as a matter of urgency, here is how you can reduce your business rates in 8 simple steps.

Step 1: Understand what changes business rates

The first step to lowering your business rates is knowing what factors will lead to changes in business rates. Your rates can be affected when there is a business rates revaluation (the next one is the 1st of April 2023) or if you:

• Move to a different commercial property
• Renovate your commercial property
• Change your business model or services
• Sublease your commercial property
• Merge two commercial properties
• Sell alcohol & annual trade changes
• Own a holiday property & availability changes

Want to learn more about these changes to your business rates? Read our previous blog, “Everything you need to know about changes to business rates.“

Step 2: See if you qualify for small business rates relief

In the UK, commercial property tenants and owners can apply for the small business rate relief program. This program can reduce your business rates bill by up to 100% (!) if you have a rateable value of less than £15K.

Please note that you can’t get small business rate relief if you already receive another form of relief on your rate bills. You’re also more likely to obtain small business rate relief if you don’t have more than one property.

Step 3: See if you qualify for rural tax relief

The reality is that rural business owners typically have less success than their big city counterparts, which is why the UK government offers rural tax relief of up to 100%, depending on your circumstances.

In most cases, you’ll qualify for rural tax relief on your business rates if your commercial property operates as the only supermarket, post office, pub, or petrol station in your area with a rateable value of under £12.5K.

Step 4: See if you qualify for retail, hospitality & leisure relief scheme

In November 2021, the UK government announced a business rates relief scheme for business owners providing retail, hospitality, or leisure services.

If your commercial property meets their criteria, you could get 50% off your business rates bills for the 2022-2023 tax year and 75% off your business rates bills for the 2023-2024 tax year.

Step 5: See if you qualify for business rate exemptions

In some cases, like with empty properties, you may not have to pay any business rates at all. You’ll most likely qualify for a business rate exemption if:

• You use your property for community amateur sports clubs
• You cannot occupy your property due to external circumstances (flood, etc.)
• Your property is registered for religion, disability support, or farming purposes.

Step 6: See if you qualify for transitional relief scheme

Transitional relief can help you budget better and control your business rate expenses by limiting how much your bills can change. Your local valuation office typically offers transitional relief when your rateable value increases or decreases during revaluation.

Step 7: Contact your local valuation office to check eligibility

If you think your commercial property could be eligible for small business rate relief or any of the business rate exemptions or relief schemes above, get in touch with your local council to assess your eligibility and begin the process of applying for reductions and exemptions.

Don’t forget: The deadline to receive a business rates rebate is the 31st of March 2023, so if you want to reduce your business rates – you better hurry!