How are Business Rates Calculated?

how are business rates calculated

How are Business Rates Calculated?

Business Rates are calculated by multiplying the “rateable value” (RV) of the commercial property by the “business rate multiplier”.

For e.g., if your commercial property’s rateable value is £28,000 per annum, your business rates will be calculated as follows.

£28,000 (RV) X 49.9 pence (0.499) (business rates multiplier for 2021-22): £13,972 (payable business rates).

Please note, the above calculation should be used only as a guidance, you must contact your council to find your actual payable amount.

What is a Rateable Value (RV)?

Rateable value is a value based on a property’s annual market rent, size and permitted use. Every commercial property in the UK is assigned a rateable value. Find Your Rateable Value Here.

What is a Business Rate Multiplier?

Business Rate Multiplier is a figure (pence-per-pound) by which a commercial property’s rateable value is multiplied to determine the amount payable in rates. The multipliers are set on yearly basis by the central government for the whole of England.

There are two types of Business Rate Multipliers:

Small Business Rate Multiplier: It is used for commercial properties with a Rateable Value of less than £51,000 per annum. For the year 2021-22, Small Business Rate Multiplier set by the central government is 49.9 pence (0.499).

For example, if your rateable value is £48,000, to calculate your business rates, you should multiply £48,000 by 0.499, which is £23,952 (payable amount).

Standard (higher) Business Rate Multiplier: For commercial properties with Rateable Value above £51,000. For the year 2021-22, the Standard Business Rate Multiplier is 51.2 pence (0.512).

If your rateable value is £52,000 per annum, then your payable amount will be £26,624 (£52,000 X 0.512).

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