Because business rates are based on factors such as the square footage of your property, taking on a larger office, opening a second site, adding warehouse space or expanding a retail location can all lead to an increase in your bill. 

For a growing business, this means business rates need to be factored into cash flow, lease negotiations and expansion planning.

Here’s everything you need to know about how business rates work, how they are calculated and what to check before taking on new premises.

What are business rates?

Business rates are a tax on most non-domestic properties. Whether your company has a shop, office, warehouse, factory, workshop, pub, restaurant or any other type of commercial premises, you will usually have to pay them.

Your rates are based on your property’s rateable value. This is an estimate of the property’s annual rental value on a specific, fixed valuation date. The Valuation Office Agency (VOA) is responsible for maintaining the rateable values for properties in England and Wales, while your local council issues the bill and collects payment.

In order to estimate your annual business rates bill, you simply multiply your property’s rateable value by the relevant multiplier (more on this below). You may also be eligible for reliefs and discounts, which can reduce the amount you end up paying. 

For example, if your rateable value is £60,000 and the relevant multiplier is 48p, the annual bill before relief would be:

£60,000 x 0.48 = £28,800

That bill is normally split into instalments by your local authority.

How business rates are calculated in 2026/27

As of 1 April 2026, business rates in England use five multipliers rather than the previous two. The rate depends on the type of property and its rateable value.

Property type	Rateable value	2026/27 multiplier
Retail, hospitality and leisure	Below £51,000	38.2p
Non-retail, hospitality and leisure	Below £51,000	43.2p
Retail, hospitality and leisure	£51,000 to £499,999	43p
Non-retail, hospitality and leisure	£51,000 to £499,999	48p
All high-value properties	£500,000 or more	50.8p

The lower retail, hospitality and leisure multipliers were introduced in April 2026 for eligible properties with rateable values below £500,000. The previous retail, hospitality and leisure relief scheme has now ended, so you must calculate bills using the new multipliers instead.

This matters because two companies with the same rateable value may not pay the same amount if one qualifies for a retail, hospitality or leisure multiplier and the other does not.

You can read more about business rate multipliers on gov.uk. 

Who pays business rates: the business or the landlord?

In most cases, your business, as the occupier of the property, is responsible for paying business rates.

However, this can change depending on your lease. Some landlords recharge rates through rent or service charge arrangements, while serviced offices, coworking spaces and managed workspaces may include rates in the overall monthly fee.

Before taking on premises, check:

• Whether business rates are billed directly to your company
• Whether rates are included in your rent or licence fee
• Whether the landlord can recharge future rate increases
• What happens if the property is empty
• Whether you are responsible for rates during a rent-free fit-out period

This is particularly important for companies moving quickly. A rent-free period can help with fit-out costs, but it does not automatically mean you will avoid rates during that period.

Small business rate relief

In England, you may be eligible for small business rate relief if your property’s rateable value is less than £15,000 and your business only uses one property. 

If the rateable value of your property is £12,000 or less and you only have one property, you won’t pay any business rates. For properties with a rateable value between £12,001 and £15,000, relief reduces gradually from 100% to 0%. 

You can contact your local council to check your eligibility for rate relief, if you think your rateable value is wrong, or if your circumstances change. 

If you’ve previously benefited from rate relief, be aware that a move to larger premises or taking on a second property may increase your rent and your rates bill at the same time.

Taking on a second property

For many growing companies, the first big business rates issue comes when you take on a second property.

This could be a second office, a new retail unit, a kitchen, more warehouse capacity, or anything really. Whatever it is, as soon as your business occupies more than one property, your eligibility for small business rate relief changes.

In England, if you get a second property, you’re allowed to keep small business rate relief on your main property for a limited period afterwards. This is 12 months if you got the second property before 27 November 2025, or 36 months if you got the second property on or after 27 November 2025.

This 36-month grace period is useful when you’re expanding, but don’t mistake it for a permanent exemption. You’ll still have to pay full rates on the new property eventually, and your main property relief can be withdrawn later depending on your circumstances.

Other reliefs and support

Small business rate relief isn’t the only support you might be eligible for. Depending on your property and circumstances, you could be able to access other types of relief that can help you manage your costs.

These can include:

• Transitional relief – this can limit how quickly your bill changes after revaluation
• Improvement relief – this may help where qualifying property improvements increase the rateable value
• Empty property relief – some empty or partly empty properties, or properties during refurbishment, may receive temporary relief before full rates become payable
• Hardship relief – local authorities may be able to help businesses in exceptional circumstances that are struggling financially

Availability depends on your local authority, your property type and how your premises are used. If you’re struggling to pay rates, or you have questions about relief you might be eligible for, it might be worth seeking professional advice from a rating surveyor before signing a new lease or challenging a valuation.

Why business rates matter more as you grow

Business rates are easy to overlook when you’re comparing premises, but they can make a massive difference to the true cost of a move.

For example, if you move from a small office to a larger headquarters, you could lose access to small business rate relief. Or if you open a second retail site, you might face rates on the new unit while still managing fit-out and staffing costs. Or, if your business takes on warehouse space, you might find that your rates, service charges, and utilities end up making the property much more expensive than expected.

This is why growing companies should assess business rates alongside:

• Rent: The monthly or quarterly lease cost
• Service charge: Shared building or estate costs
• Insurance: Building or landlord insurance charged to the tenant
• Utilities: Energy, water and connectivity costs
• Fit-out: One-off capital expenditure to make the space usable
• Rates: The annual property tax bill

The key point is that rates can affect your break-even point. Before signing a lease, you should know what your rates bill is likely to be and whether any relief or transitional support applies.

How business rates affect lease negotiations

When comparing two sites, cheaper rent may not always mean a cheaper total occupancy cost. A prominent retail unit or larger warehouse may attract a higher rate bill, even if the rent looks competitive.

Before signing, ask the agent or landlord for:

• The current rateable value
• The latest business rates bill, if available
• Confirmation of whether any relief has already been applied
• Details of upcoming revaluation changes
• Whether any part of the property is separately assessed
• Whether fit-out works could affect your future rateable value

You should also check the lease wording carefully. Responsibility for rates, empty property costs, shared areas and recharged costs can make a major difference over the life of the lease.

Can you challenge your rateable value?

You may be able to challenge your rateable value if you believe it is wrong.

This might be worth considering if:

• The property details are inaccurate
• The floor area is wrong
• The property has changed
• Comparable nearby properties have lower valuations
• Part of the property is unusable
• The rental market has shifted significantly

However, challenging a valuation is not risk-free. A review could lead to no change, a reduction or, in some cases, an increase. If the potential saving is significant, take advice before proceeding.

Business rates checklist before expanding premises

Before moving, opening a second site or taking on additional space, work through this checklist.

• Check the rateable value – look up the property’s current rateable value before making a decision
• Use the correct multiplier – make sure you know whether the property qualifies for a retail, hospitality or leisure multiplier, a small business multiplier, the standard multiplier or the high-value multiplier
• Model the full annual cost – add rates to rent, service charge, utilities, insurance, staffing and fit-out costs
• Check relief eligibility – do not assume relief applies automatically. Confirm whether you qualify and whether you need to apply
• Think beyond year one – if relief is temporary, model the cost once it ends.
• Review the lease – check who is responsible for rates, empty property costs and any landlord recharges
• Consider future changes – revaluation, fit-out works, or changes in property use could affect future bills
• Take advice where the numbers are material – if rates are a major cost, a rating adviser or property lawyer may help you avoid expensive mistakes

Final thoughts

If you’re planning to expand, don’t forget to factor business rates into your overheads.

A new site might bring you more capacity or access to a larger market, but it can also mean higher fixed costs. Rates can be one of the biggest of those costs, particularly once you move beyond small premises or start operating across multiple sites.

Before committing to a lease, treat business rates as part of your growth plan. Check the current bill, understand the multiplier, assess reliefs and assess how it will impact your cash flow. That way, you won’t be blindsided by unsustainable costs.