Business rates

Business rates are a property tax paid by occupants of non-domestic properties. The basic rates bill is determined by multiplying the rateable value of a property (a ‘hereditament’ or ‘heritage’) by the ‘multiplier’. Properties’ rateable values are set by the Valuation Office Agency in England and Wales, the Assessors in Scotland, and Land and Property Services in Northern Ireland.

The multiplier is expressed in pence per pound of rateable value. It is set by the UK Government in England and by the Scottish and Welsh Governments in Scotland and Wales. In Northern Ireland, both the Northern Ireland Executive and the district councils set separate rating multipliers, with the full rate liability collected by Land and Property Services. Therefore, a property with a rateable value of £100,000, where the multiplier was 54.6 pence in the pound, would have an annual business rate liability of £54,600.

Billing authorities (district and unitary councils) collect business rates. In England, the revenue is partly pooled at central government level and redistributed, and part is retained locally. In Scotland and Wales, the rates collected are pooled at the devolved level and redistributed to local authorities via a needs-based formula.

Various reliefs, both mandatory and discretionary, are available from full business rates liability. Additional details on business rate reliefs, and on grants paid through the business rate system during the Covid-19 pandemic, can be found in the Library briefing paper Business rates reliefs. Limited powers also exist for local authorities to set supplementary business rates.

Business rates are devolved to Scotland, Wales and Northern Ireland. The essentials of the business rates system are the same in all four parts of the UK. This paper focuses on the system in England but notes some instances where the UK’s different systems diverge.

Additional detail on the 2023 revaluation of business rates can be found in the Library briefing Business rates: the 2023 revaluation. Details of the Business Rate Retention Scheme, and associated plans to reform local government finance, can be found in the Library briefing Reviewing and reforming local government finance.