If you’re leasing a commercial property in the UK, business rates are a cost you’ll likely encounter—and they can significantly affect your operating expenses. Whether you’re moving into your first retail unit, renting a creative workspace, or expanding into a new office, it’s essential to understand how business rates work and who is responsible for paying them.

What Are Business Rates?

Business rates are a form of tax charged on commercial properties such as offices, shops, warehouses, studios, and industrial units. These rates help fund local services, much like council tax for residential properties. Business rates are calculated based on the rate able value of the property, which is assessed by the Valuation Office Agency (VOA). This value reflects the property’s open market rental value on a specific date.

Who Pays Business Rates?

In most cases, the tenant (occupier) is responsible for paying business rates—not the landlord. When you sign a commercial lease, you typically agree to take on these charges as part of the operating costs of the space. However, there are some exceptions and scenarios where this might vary:

• If the unit is vacant, the landlord may be liable (though some reliefs may apply).

• In serviced offices or managed work-spaces, the landlord might include business rates within the rent or service charge.

• Always check the lease terms to confirm who is liable and how the costs are managed.

Can You Get Relief or Exemptions?

Yes, there are several business rates relief schemes that can reduce your liability:

✅ Small Business Rate Relief

If your property has a rate able value below £15,000 and you’re only using one property, you may be eligible for reduced or even zero rates.

✅ Empty Property Relief

Most commercial properties are exempt from business rates for the first 3 months they’re empty (6 months for industrial properties).

✅ Retail, Hospitality & Leisure Relief

Some sectors may receive temporary relief, especially in response to economic challenges or government initiatives. To find out what you’re eligible for, it’s best to contact your local council or check your rate able value with the VOA.

How to Estimate Business Rates

You can calculate your business rates by multiplying the rate able value of your property by the multiplier set by the government. This multiplier can change each year and differs between small and standard businesses.

For example:

If your rate able value is £20,000 and the multiplier is 0.512, your business rates would be:

£20,000 × 0.512 = £10,240 per year

Final Thoughts: Know Before You Lease

Understanding business rates is essential when budgeting for a commercial property. While tenants are usually responsible, always read your lease carefully and clarify responsibilities upfront to avoid unexpected costs. If you’re unsure about your obligations or want help navigating reliefs and exemptions, consult with a property advisor or local authority for tailored advice.