London has some of the most expensive business rates in the UK, so it’s useful to understand what they are and how they work. You could still be affected even if you work from home or operate an online business, so it’s important to do your research. Rates can also vary based on area borough, so this might influence which area of London you start your business if this is relevant to you.
It’s not all bad news, though, as there are also certain exemptions and reliefs to be aware of that can actually help reduce your final rates bill, saving you money in the long run.
We’ll break it all down for you, starting with the absolute basics.
What are business rates?
In simple terms, business rates (sometimes called commercial rates) are a tax levied on business properties, with the money being used to help fund various local services like education, and emergency services.
Just like council tax, business rates are paid annually in 10 or 12 equal instalments. If you miss a payment, you will need to make up the difference by paying a larger amount at some point (or by making several larger payments over time).
Do business rates affect me?
If you use a property for business purposes, then the chances are you’ll have to pay business rates on it.
Affected properties include shops, offices, pubs, warehouses, factories and the like, but also any properties you may rent out (holiday properties, for example).
What if I work from home?
The rules here are a little bit complicated, but we’ll try to explain them. Essentially, if you use a part of your home for business purposes (often referred to as ‘non-domestic’ activity), you may need to pay business rates on this one part (but not the whole property). For example, business rates might be chargeable if:
- You live above your own shop, as this would mean your property was being used for both business and domestic purposes
- Customers and/or staff spend time at your property
- You make significant changes to your home for the sake of your business (e.g. converting your front room into a barber shop)
If you simply use your bedroom as an office or sell goods from home, you’re probably fine.
There is a bit of a grey area, though, as you would still be required to pay business rates if you had a separate warehouse to store stock you were selling online. So, if you’re ever unsure, make sure to check with an accountant.
How do I estimate business rates?
Your property will have a ‘rateable value’ (shown as RV) and this is managed by the Valuation Office Agency (VOA), which currently uses the open market rental value of the property on 1 April 2024 to calculate how much you should be charged. The VOA reviews the ratable values (RVs)of non-domestic properties in England and Wales every 3 years.
In order to work out exactly how much you will need to pay, simply multiply the rateable value of your property by the correct ‘multiplier.’
A multiplier tells you the number of pence you will pay per pound of rateable value.
There are five new multipliers for the 2026/27 tax year. Our table below shows the multipliers and the rateable values they apply to for 2026/27. The type of industry you’re involved in will also have an impact – such as if your property is used for retail, hospitality, or leisure.
Business rate multipliers and rateable values from April 2026
| Rateable Value | Multiplier | |
| Small business (RHL – retail, hospitality and leisure) | Below £51,000 | 38.2p |
| Small business (other sectors) | Below £51,000 | 43.2p |
| Standard (RHL – retail, hospitality and leisure) | £51,000 – £499,999 | 43.0p |
| Standard (other sectors) | £51,000 – £499,999 | 48.0p |
| High-value on all properties | £500,000 and above | 50.8p |
Can I claim relief on business rates?
Yes – from 1st April 2026 there are several business rate reliefs that could help lower your bill. Transitional Relief eases in any increases, while Supporting Small Business Relief helps if you’re losing existing support.
There are also discounts for pubs, live music venues, and certain property improvements. Small Business Rate Relief is still available for properties with lower rateable values.
Business Rates Reliefs from April 2026
| Relief Type | What it means for you |
| Transitional Relief | This caps how much your bill can increase if your rates rise significantly after the 2026 revaluation. |
| Supporting Small Business Relief (SSB) | Helps businesses facing around a 15%-30% increase in rates after losing other reliefs. |
| Pubs & Live Music Venues Relief | Provides a 15% discount for eligible hospitality businesses in 2026/27. |
| Small Business Rate Relief | Full relief for properties with a rateable value up to £12,000, tapering up to £15,000. |
| Empty Property Relief | Available if your property is empty or partially empty. |
What if I use more than one property?
An important thing to note is that if your business does grow to the point where you need to relocate to larger premises or combine two previously distinct properties, you must report the changes to the VOA.
Failure to do this may result in financial penalties.
The good news is you can still claim relief on your main property for up to 3 years after taking on an additional property, giving you a cash runway while you scale your business.
After this period, you may still qualify for relief on your main property, but only if:
- Each of your additional properties has a rateable value below £2,899
- The combined rateable value of all your properties is less than £20,000 (or £28,000 in London)
Do I need an accountant?
The simple answer is maybe. It really comes down to how well you feel you understand the complexities of business rates – that is, do you feel comfortable working out how much you owe and when you need to pay it?
The reality is that it’s easy to make mistakes, especially with the new updates – which is why it’s a good idea to seek professional advice if you’re unsure about anything at all.
An experienced accountant can walk you through the whole process, ensuring you’re fulfilling all your obligations and also making sure you’re operating in the most tax-efficient way possible.
So, whether you’re working from home, moving premises, or setting up an online business, the right advice could prove invaluable.
Find more help with accounting and finance for your London-based business in our information centre.
