Last Updated on AUG 22, 2026

Business rates are a major property cost for businesses, but the system changed significantly from 1 April 2026.

New rateable values took effect following the 2026 revaluation, and England introduced a new set of business rates multipliers based on property value and, in some cases, whether the property is used for retail, hospitality or leisure.

The Valuation Office Agency was also integrated into HMRC on 1 April 2026 and its functions now sit within the Valuation Office.

It continues to determine rateable values for non-domestic properties in England and Wales, while local councils calculate and collect business rates bills.

This article explains the current 2026/27 system, including rateable values, multipliers, reliefs, revaluation and valuation challenges. Business rates policies differ between England and Wales, so the relevant national rules must be used when calculating a bill.

What Is the Valuation Office Agency (VOA) and What Do They Do?

The Valuation Office Agency (VOA) was integrated into HM Revenue & Customs on 1 April 2026, with its functions continuing through the Valuation Office (VO) within HMRC.

It is responsible for property valuations used for business rates and Council Tax across England and Wales, alongside other property valuation functions. At the end of the 2025/26 financial year, the VOA had 4,040 full-time-equivalent employees.

Key functions of the VOA include:

• Compiling and maintaining Council Tax bands for 26.8 million domestic properties
• Determining the rateable value of over 2.1 million non-domestic (commercial) properties for business rates
• Advising ministers on property valuation and related benefits
• Deciding appeals for the Community Infrastructure Levy
• Determining values for Right to Buy sales in England and Wales
• Rent officers set Local Housing Allowance rates and advise on Housing Benefit subsidy levels

The VOA doesn’t collect your business rates; that’s the job of your local council. However, their property valuations are the foundation of every business rates bill in England and Wales.

As markets change, the VOA conducts regular revaluations to ensure the system remains fair. Their work underpins transparency in property-based taxation, making sure the government has the accurate property data it needs to fund services and deliver benefits effectively.

What Are Business Rates and Who Needs to Pay Them?

Business rates are a tax on non-domestic properties. If you use a building or part of a building for commercial purposes, you’ll probably need to pay them. These funds support local services such as education, emergency response, and infrastructure.

Definition of Business Rates

Business rates are separate from Council Tax. While Council Tax applies to domestic dwellings, business rates apply to properties used for commercial activity. Your bill is based on the property’s rateable value, set by the VOA.

Types of Properties Subject to Business Rates

You must pay business rates if you use:

• Shops
• Offices
• Warehouses
• Factories
• Holiday rentals or guest houses
• Pubs, restaurants, or cafés
• Stables (unless used for farming)

Even mixed-use properties, such as living above your shop, may be liable for both Council Tax and business rates.

Domestic vs Non-domestic Distinction

Domestic properties fall under Council Tax. Non-domestic properties, or any part used for commercial purposes, fall under business rates. For example, a converted garage hair salon in your home would usually attract business rates.

Who is Exempt?

Certain properties are exempt, including:

• Agricultural land and buildings
• Buildings for disabled welfare or training
• Buildings registered for public religious worship

If you’re unsure, the VOA can confirm your property’s status.

 

How Does the VOA Calculate Rateable Value?

The Valuation Office calculates a property’s rateable value by estimating its annual open-market rental value on a specified valuation date. The current 2026 rating list took effect on 1 April 2026 and is based on open-market rental values as at 1 April 2024.

Depending on the type of property, the VOA uses different methods:

• Rental comparison: Based on market rents for similar properties nearby
• Receipts and expenditure: Used for pubs, hotels, or leisure facilities
• Contractor’s basis: For properties rarely let out, such as schools or fire stations

The VOA may request rental or lease details to ensure your valuation is accurate. Failure to provide this data can delay your valuation or affect the outcome.

A property’s rateable value reflects its open market rental value under normal conditions, not its income or mortgage status.

If you think your rateable value is wrong, or if details about your property (such as floor area) are inaccurate, you can check and challenge it using your Business Rates Valuation Account online.

How Are Business Rates Calculated by Local Councils?

Once the VOA assigns a rateable value, your local council uses it to calculate your bill. This is done by applying a multiplier and deducting any relief you qualify for.

Business Rates Multipliers for 2026/27

For properties in England, the multiplier used from 1 April 2026 depends on the property’s rateable value and whether it qualifies as a retail, hospitality or leisure property.

Property Type	Rateable Value	2026/27 Multiplier
Retail, Hospitality & Leisure	Below £51,000	38.2p
Retail, Hospitality & Leisure	£51,000–£499,999	43.0p
Other Properties	Below £51,000	43.2p
Other Properties	£51,000–£499,999	48.0p
All Properties	£500,000 or more	50.8p

The basic calculation remains:

Rateable Value × Applicable Multiplier = Basic Business Rates Liability

For example, a non-retail, hospitality or leisure property with a rateable value of £20,000 uses the 43.2p small business multiplier, producing a basic charge of £8,640 before applicable reliefs or supplements.

For 2026/27, a temporary 1p transitional relief supplement can also apply to ratepayers who do not receive Transitional Relief or Supporting Small Business Relief.

Different multipliers apply in Wales. For 2026/27, Wales uses a 0.350 retail multiplier for qualifying retail properties below £51,000, a 0.502 standard multiplier for most properties and a 0.515 higher multiplier for qualifying properties above £100,000.

Who Sends the Bill and When?

Your local council sends the bill between February and March for the tax year starting in April. You can pay in 10 or 12 instalments, or in full.

Always ensure your property details are accurate with both the VOA and your local council to avoid errors.

What Happens During a Revaluation?

A revaluation updates the rateable values of business properties to reflect current market conditions. This keeps the system fair and transparent.

The most recent revaluation took effect in England and Wales on 1 April 2026. The new rateable values are based on open-market rental values as at 1 April 2024.

Revaluations are now carried out on a three-year cycle to keep valuations more closely aligned with changes in the property market.

During revaluation:

• All properties are assigned a new rateable value
• The government revises the multipliers
• The VOA may request rental and lease information to ensure accuracy

These revaluations don’t account for your business’s profitability, they focus on market rental data.

Importantly, a rise in your rateable value may not lead to an equal rise in your bill due to transitional relief.

If you believe your valuation is wrong, you can challenge it through your Business Rates Valuation Account.

Can You Appeal or Challenge Your Business Rates?

If you believe your business rates are inaccurate, you can appeal through the VOA’s Check, Challenge, Appeal process:

1. Check: Verify your property details (e.g. area, layout, use)
2. Challenge: Submit a challenge with evidence
3. Appeal: Escalate to the Valuation Tribunal if you disagree with the outcome

Reasons for appeal include:

• Incorrect rateable value
• Inaccurate property details
• Local disruptions (e.g. roadworks, floods) that affect property use

Keep paying your business rates during the appeal. If successful, overpaid amounts will be refunded.

You can manage the process online or appoint an agent registered under VOA agent standards.

What Types of Business Rates Relief Can You Get?

Business rates relief reduces your payable amount.

Available reliefs include:

Small Business Rate Relief

• Properties with rateable value under £15,000
• 100% relief under £12,000, tapering to 0% at £15,000
• Must be your only or main property

Retail, Hospitality & Leisure Relief

• From 1 April 2026, England’s temporary Retail, Hospitality and Leisure Relief was replaced by permanently lower multipliers for qualifying properties with rateable values below £500,000.
• 38.2p Multiplier: Qualifying RHL properties with rateable values below £51,000
• 43.0p Multiplier: Qualifying RHL properties with rateable values from £51,000 to £499,999
• No £110,000 Cash Cap: The previous RHL relief cash cap does not apply to these multipliers
• Pubs and Live Music Venues: Eligible properties receive an additional 15% business rates relief during 2026/27

Rural Rate Relief

• Applies to businesses in rural areas with fewer than 3,000 people
• Only village pub, shop, or petrol station
• 100% relief available

Transitional and Supporting Small Business Relief

The 2026 revaluation introduced a new Transitional Relief scheme in England to limit sudden increases in business rates bills.

For 2026/27, revaluation-related bill increases are generally limited to:

• 5%: Properties with a rateable value up to £20,000, or £28,000 in London
• 15%: Properties above those thresholds and up to £100,000
• 30%: Properties with a rateable value above £100,000

Supporting Small Business Relief can also apply where a business faces a higher bill after losing some or all of its Small Business Rate Relief, Rural Rate Relief, previous Retail, Hospitality and Leisure Relief or earlier Supporting Small Business Relief.

For 2026/27, eligible increases are limited to the higher of £800 or the relevant transitional percentage cap.

Eligible Transitional Relief is applied by the council as part of the bill calculation.

When Do You Need to Report Changes to the VOA?

To avoid incorrect bills, you must report certain property or business changes to the VOA.

These include:

• Expansions, renovations, or demolitions
• Subletting parts of your property
• Changes to property use
• Merging or splitting units
• Moving business location

You can report updates via your Business Rates Valuation Account. The VOA may request documentation such as leases or floorplans.

Failing to report changes could lead to backdated bills or missed relief opportunities.

Do You Need to Pay Business Rates If You Work from Home?

You usually don’t pay business rates if your home-based business:

• Uses a small part of your home (e.g. a spare bedroom)
• Doesn’t have customer visits or employees
• Has no signage or external modifications

However, business rates may apply if:

• You’ve created a separate business area (e.g. a converted garage salon)
• Customers visit regularly
• You’ve made structural changes
• You employ staff who work from the home

These are classed as mixed-use properties and may attract both business rates and Council Tax.

Contact the VOA to confirm your property’s rating.

How Are Business Rates Set for Pubs and Hospitality?

Pubs and licensed premises are valued using Fair Maintainable Turnover (FMT), the annual trade your premises could achieve if run efficiently.

Factors include:

• Type of premises and location
• Trading history and seasonal patterns
• Services provided (food, gaming, events)
• Income from accommodation
• Rents and turnovers of similar premises

A percentage is applied to FMT to determine the rateable value. These percentages are agreed with industry groups like the British Beer and Pub Association.

Pubs may qualify for reliefs such as retail, hospitality, leisure, or rural relief if it’s the only pub in the area.

How Are Holiday Lets and Self-Catering Properties Assessed?

Holiday lets may fall under business rates instead of council tax.

Criteria for Business Rates vs Council Tax

Location	Nights Available	Nights Let	Future Availability
England	140	70	140
Wales	252	182	252

If your property qualifies, inform the VOA using the correct form. If your rateable value is under £15,000, you may also qualify for Small Business Rate Relief.

Failing to report correct use could mean you’re billed incorrectly or miss out on relief.

What Should You Do About Your Business Rates?

Managing your business rates requires action:

• Check your rateable value online
• Keep property details updated
• Challenge valuations if needed
• Apply for reliefs promptly
• Report changes to avoid backdated bills

Professional agents can help, but many tasks can be done online. Staying proactive protects your business and can save you money.

Business Rates Relief Options at a Glance

Relief/Support	Who Qualifies	2026/27 Position	Administration
Small Business Rate Relief	Rateable value below £15,000	Up to 100%	Local Council
RHL Lower Multipliers	Qualifying retail, hospitality and leisure properties below £500,000 RV	38.2p or 43.0p multiplier	Local Council
Rural Rate Relief	Only village business under 3,000 people	100%	Local Council
Transitional Relief	Significant increase after revaluation	Phased increases	Automatic/Local
Supporting Small Business	After loss of full SBR	Annual increase capped	Automatic/Local
Pubs & Live Music Venues Relief	Eligible occupied pubs and live music venues	Additional 15% relief in 2026/27	Local Council

This table summarises the main reliefs that most UK businesses can access. Check with your council for updates.

Conclusion

Business rates changed substantially from 1 April 2026. The latest rating list now uses property values based on the 1 April 2024 valuation date, while the former Valuation Office Agency has been integrated into HMRC as the Valuation Office.

Businesses in England also need to account for the new five-multiplier structure, the end of the temporary 40% Retail, Hospitality and Leisure Relief and the introduction of updated Transitional and Supporting Small Business Relief following the 2026 revaluation.

The Valuation Office continues to determine rateable values, while local councils calculate bills, apply qualifying reliefs and collect payments.

Businesses should check both their current 2026 rateable value and the multiplier shown on their bill, particularly where property use, size or occupation has changed.

Rules are not identical across England and Wales, so businesses should always use the multiplier and relief arrangements applicable to the nation in which the property is located.

FAQs

What is the difference between the Valuation Office and the local council?

The Valuation Office within HMRC sets the rateable value, while your local council applies the relevant multiplier and reliefs and collects the business rates bill.

Can you challenge business rates yourself?

Yes, through your Business Rates Valuation Account online.

When do business rates bills arrive?

Usually in February or March for the tax year starting in April.

What does ‘rateable value’ mean?

It’s the estimated annual rental value of your property on a specific date.

Who doesn’t have to pay business rates?

Properties like agricultural land or religious buildings are usually exempt.

Do home-based businesses pay business rates?

Only if a significant portion of the home is used commercially.

How often does VOA revalue properties?

Revaluations now operate on a three-year cycle in England and Wales. The latest rating list took effect on 1 April 2026 using property values from 1 April 2024.