Business rates: Where are we now?

What are business rates? 

Business rates are a property tax imposed on non-domestic properties, such as offices, restaurants, shops and factories. 

The rates paid are worked out by multiplying the 'rateable value' (RV) of the property by the 'multiplier'. The multiplier is expressed in pence per pound. 

The rateable value is based on the open market value of the property at a specific point in time. 

There are various business rates relief schemes which can be used to reduce a business rates bill. 

Changes are regularly made to business rates. It’s important that businesses remain up-to-date so they are aware of their financial obligations and can plan accordingly. 

Business rates in England 

Current business rates system in England 

There are two multipliers; small business for properties with a rateable value (RV) below £51,000 and standard for properties with a rateable value above £51,000. 

For 2024/25, the multipliers are 49.9p (small business) and 54.6p (standard). 

There are various relief schemes, including: 

• Retail, hospitality, and leisure relief: In 2024/25, 75% relief for retail, hospitality, and leisure firms up to a maximum of £110,000 per business. 
• Small business rates relief: Properties with a RV below £12,000 pay no business rates. For properties with a rateable value of £12,001 to £15,000, relief reduces gradually from 100% to 0%. 

Changes announced in the Autumn Budget 2024 

In her 2024 Autumn Budget, chancellor Rachel Reeves announced business rates changes for England for 2025/26.  

• Retail, hospitality and leisure relief has been extended, but the relief will be reduced from 75% to 40%. 
• The small business multiplier will be frozen at 49.9%, and the standard multiplier will increase to 55.5%.  
• Charitable rate relief will not apply to private schools. 

The Government will introduce two permanently lower multipliers for retail, hospitality, and leisure properties with rateable values below £500,000 from 2026/27. This is to “create a fairer business rates system and level the playing field for the high street”. 

The change will be funded by applying a higher multiplier to properties with a rateable value of £500,000 or above, including distribution warehouses used by large online companies.   

Alongside the Autumn Budget, the ‘transforming business rates’ discussion paper was published covering “the government's priority areas for reform of the business rates system”. 

Impact on businesses 

According to Colliers, businesses in England eligible to retail, hospitality and leisure relief will see their bills increase from an average of £3,751 a year to £9,003 a year as a result of the reduced reduction. 

The professional services firm said restaurants will experience an average rise from £5,563 to £13,351, with business rates for an average pub going up from £4,017 to £9,642. 

Business rates in Scotland 

Current business rates system in Scotland 

Scotland has three multipliers. For 2024/25, they are as follows: 

• Basic property rate: Properties with a Rateable Value up to £51,000: 49.8p. 
• Intermediate property rate: Properties with a Rateable Value greater than £51,000 and up to £100,000: 54.5p. 
• Higher property rate: Properties with a Rateable Value above £100,000: 55.9p. 

There are various relief schemes, including the Small Business Bonus Scheme (SBBR). Businesses get up to 100% business rates relief if: 

• combined rateable value of all business premises is £35,000 or less 
• rateable value of individual premises is £20,000 or less 
• property is actively occupied 

Hospitality businesses in the Highlands and Islands (including grassroots music venues with capacity up to 1,500) receive 100% relief, capped at £110,000 per business. 

Changes announced in the Scottish Budget 2025/26 

In its Budget for 2025/26, the Scottish Government announced: 

• The basic property rate will be frozen at 49.8p. 
• The intermediate property rate will increase to 55.4p 
• The higher property rate will increase to 56.8p. 
• A 40% relief will be introduced for hospitality businesses (including grassroots music venues with a capacity of up to 1,500) eligible for the basic property rate, capped at £110,000 per business. 

Business rates in Wales 

Current business rates system in Wales 

Wales has one multiplier for all properties. In 2024/25 it is 56.2p. 

There are various relief schemes, including: 

• Retail, Leisure and Hospitality Rates Relief: Retail, leisure and hospitality businesses are eligible for 40% relief, capped at £110,000 per business. 
• Small Business Rates Relief:  
  • businesses with a RV of up to £6,000 receive 100% relief. 
  • businesses with a RV between £6,001 and £12,000 receive relief on a tapered basis from 100% to zero. 
  • subject to a maximum of two properties per business in each local authority. 

Changes announced in the Welsh Budget 2025/26 

In its Budget for 2025/26, the Welsh Government announced these changes: 

• The increase to the multiplier will be capped at 1%, lower than a 1.7% (September CPI) increase.  
• Retail, Leisure and Hospitality Rates Relief will be extended. 

Business rates in Northern Ireland 

Current business rates system in Northern Ireland 

Northern Ireland has two multipliers; the district council rate set by district councils, and the regional rate set by the Northern Ireland Executive. 

For 2024/25, the regional rate is 29.02p. District council multipliers range from 25.69p to 38.22p, so there’s a cumulative multiplier of 54.71p to 67.24p. 

There are various relief schemes, including Small Business Rate Relief (SBRR) which provides: 

• 50% reduction for properties with a net annual value (NAV) of £2,000 or less. 
• 25% reduction for properties with a NAV of more than £2,000 but not more than £5,000. 
• 20% reduction for properties with a NAV of more than £5,000 but not more than £15,000. 

Changes announced by the Northern Ireland Executive 

A new valuation list is being created which will be used for the calculation of business rates from April 2026. In December 2024, Finance Minister Dr Caoimhe Archibald announced “a comprehensive Strategic Review Cycle of all rates… initially prioritising the policies of Small Business Rate Relief Scheme and Non-Domestic Vacant Rating exclusions”.  

What businesses should do  

Increases in business rates could have an impact on your business’ cash flow so you should plan accordingly and adjust your cash flow forecasts. 

If you believe your rateable value is too high, you can challenge it:  

• England and Wales: Valuation Office Agency 
• Scotland: Scottish Assessors 
• Northern Ireland: Commissioner of Valuation 

Make sure you’re claiming all the reliefs you are eligible for. If you are going to start trading from a new property, consider the rateable value and option for relief to get the most favourable property. 

To understand the implications of business rates, and ensure you are benefiting from all relevant reliefs, contact TaxAssist Accountants. 

Last updated: 19th February 2025