Business Rates Relief: What Small Businesses Can Claim

The Accounted Business Team·12 February 2026·7 min read

Business rates are one of the most significant fixed costs for any business that occupies commercial premises in England. They are essentially a property tax based on the estimated rental value of your premises, and they apply whether you own or rent the property. However, a range of reliefs are available that can substantially reduce or even eliminate your business rates bill. This guide explains the main reliefs, who qualifies, and how to apply.

What Are Business Rates?

Business rates, formally known as non-domestic rates, are charged on most non-residential properties in England, including shops, offices, pubs, warehouses, factories, and holiday rental properties. The amount you pay is based on your property's rateable value (RV), which is set by the Valuation Office Agency (VOA) and is intended to reflect the annual open market rental value of the property.

The rateable value is multiplied by a multiplier set by the government each year. For 2025/26, the standard multiplier is 55.5p in the pound and the small business multiplier is 49.9p in the pound. So a property with a rateable value of £20,000 would have a basic rates bill of £9,980 before any reliefs are applied (using the small business multiplier).

Small Business Rates Relief

Small Business Rates Relief (SBRR) is the most widely claimed relief and can completely eliminate your business rates bill if your property is small enough.

Full Relief (100%)

You qualify for 100% relief if your property has a rateable value of £12,000 or less and it is the only commercial property you occupy. This means you pay no business rates at all.

Tapered Relief

If your property's rateable value is between £12,001 and £15,000, you receive tapered relief that gradually reduces from 100% to 0%. The relief is calculated on a sliding scale: for every £1 of rateable value above £12,000, the relief decreases proportionally.

For example, a property with a rateable value of £13,500 would receive 50% relief. A property at £14,000 would receive approximately 33% relief.

The "Only Property" Rule

To qualify for SBRR, the property must be your only commercial property, or if you have additional properties, their individual rateable values must not exceed £2,899, and the total rateable value of all your properties must not exceed £19,999.

If you take on a second property, you may lose SBRR on your main property. However, there is a 12-month grace period during which you can retain SBRR on your main property after acquiring an additional one, provided the additional property's rateable value is below the thresholds.

How to Apply

You do not need to apply for SBRR in most cases. Your local council should apply it automatically based on the information they hold. However, it is worth checking your rates bill to ensure the relief has been applied. If it has not, contact your local council's business rates team. The relief is administered locally, not by HMRC.

Rural Rate Relief

If your business is located in a designated rural area with a population of 3,000 or less, you may qualify for rural rate relief. Mandatory rural rate relief of 50% is available for the following types of business: the only general store in the village (rateable value up to £8,500), the only post office in the village (rateable value up to £8,500), and the only pub or petrol station in the village (rateable value up to £12,500).

Many local councils top this up to 100% through discretionary rural rate relief, though this varies by council.

Qualifying Conditions

The property must be in a rural settlement designated by the local council, and it must be the only business of its type serving that community. If a second shop opens in the same village, for example, neither would qualify for mandatory rural rate relief.

Charitable Rate Relief

Registered charities and community amateur sports clubs (CASCs) qualify for mandatory 80% relief on properties used wholly or mainly for charitable purposes. Local councils can top this up to 100% through discretionary relief.

Not-for-profit organisations that are not registered charities, such as community groups and social enterprises, may also be eligible for discretionary charitable relief, but this is entirely at the council's discretion.

Enterprise Zone Relief

Businesses located in designated enterprise zones may qualify for business rates relief. The terms vary by zone, but typical relief is 100% of business rates for up to five years, up to a maximum of £275,000 per business (subject to subsidy control limits).

Enterprise zones have been designated in specific areas across England to encourage economic development and job creation. If you are considering taking on commercial premises, it is worth checking whether the location falls within an enterprise zone, as the rates saving can be substantial.

Transitional Relief

When the VOA conducts a revaluation of all business properties (the most recent took effect from April 2023), some properties see large increases or decreases in their rateable values. Transitional relief limits the annual increase in your rates bill following a revaluation, phasing in the increase gradually over several years.

Transitional relief is applied automatically by your local council. You do not need to apply for it. However, be aware that transitional relief works both ways: if your rateable value decreased at the last revaluation, the reduction in your rates bill is also phased in over time, so you may not benefit from the full reduction immediately.

Improvement Relief

From April 2024, the government introduced improvement relief to encourage businesses to invest in their properties. If you make qualifying improvements to your property that increase its rateable value, the resulting increase in business rates is deferred for 12 months. This means you can complete improvements and occupy the upgraded premises for a year before any additional rates become payable.

You must notify your local council of the improvements and the completion date to claim this relief.

Empty Property Relief

If your commercial property is empty, you are generally exempt from business rates for the first three months of vacancy (six months for industrial properties such as warehouses and factories). After that, full business rates become payable even though the property is unoccupied.

Certain properties are exempt from empty property rates indefinitely, including properties with a rateable value below £2,900, listed buildings, and properties owned by charities where the next use will be charitable.

Hardship Relief

If your business is experiencing financial difficulty and paying full business rates would cause hardship, you can apply to your local council for hardship relief. This is discretionary, meaning the council decides whether to grant it and how much relief to give. You will typically need to provide evidence of financial difficulty and demonstrate that the business would suffer significant hardship without the relief.

Hardship relief is normally temporary and may be reviewed periodically.

How to Check Your Rateable Value

You can check your property's rateable value on the GOV.UK website using the "Find a Business Rates Valuation" service. If you believe the rateable value is too high, you can challenge it through the VOA's Check, Challenge, Appeal process. This involves three stages: checking the facts about your property, formally challenging the rateable value if the facts are correct but the value seems wrong, and appealing to the Valuation Tribunal if the challenge is not resolved satisfactorily.

Challenges can take time to resolve, and there is no guarantee of a reduction, but it is worth pursuing if you have evidence that comparable properties have lower valuations.

Subsidy Control

Most business rates reliefs are subject to the UK's subsidy control rules (which replaced EU State Aid rules after Brexit). The general threshold is that a business can receive up to £315,000 of subsidies over a three-year period. For most small businesses, this is unlikely to be a constraint, but if you receive multiple forms of government support, it is worth keeping track of the cumulative total.

Practical Tips

Check your rates bill carefully when you receive it. Ensure that any reliefs you are entitled to have been applied. If in doubt, contact your local council's business rates team rather than waiting.

If you are taking on new premises, factor business rates into your cost calculations from the outset. A property with a rateable value just under £12,000 will cost nothing in business rates, while one valued at £15,000 will cost several thousand pounds per year. This can be a deciding factor when choosing between premises.

Review your rateable value after any revaluation. If the VOA has increased your rateable value and you disagree, challenge it promptly. The earlier you start the process, the sooner any correction will take effect.

Let Accounted and Penny Help

Business rates are a significant overhead, and claiming the right reliefs can save your business thousands of pounds each year. Accounted helps you track all your property-related costs, including business rates, rent, utilities, and maintenance, in one place. Penny, your AI bookkeeper, categorises these expenses automatically and ensures nothing is missed when it comes to your tax return. Start your free trial today and get a clear picture of your true property costs.

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