Business rates exemption: who pays and 2026 changes

Which properties are exempt from business rates?

Certain properties are exempt from business rates, for example farm buildings or places used for the welfare of disabled people. If the Valuation Office (VO) decides a property in England is exempt, business rates will not need to be paid on it again unless the business or premises change.

An exemption is different from business rates relief, which is a reduction in the bill that some businesses in England are eligible for. Whether a property may be exempt, or may qualify for relief instead, is one of the points a business rates review could check alongside the rateable value and the bill. Relief from the local council is sometimes automatic, but an application may be needed.

Do all businesses need to pay business rates?

No. Business rates are charged on most non-domestic properties, such as shops, offices, pubs, warehouses, factories, holiday rental homes and guest houses, and anyone using a building or part of a building for non-domestic purposes will probably have to pay. ^[1]

See also the guide to business rates appeal.

Home-based businesses do not usually have to pay business rates where only a small part of the home is used for the business, for example a bedroom used as an office. Business rates may be due as well as Council Tax where a property is part business and part domestic, such as living above a shop, or where the home has been changed for the business, such as a garage converted to a hairdresser's.

Stables usually attract business rates unless the horses are used for farming, and Council Tax may be paid instead where the stables are in a garden. Where it is not clear whether business rates or Council Tax should be paid on stables, the Valuation Office (VO) can be contacted to check.

Reliefs in England that can remove the bill

Several reliefs for property in England can reduce a bill to nil, depending on the circumstances.

• Small business rate relief: no business rates are paid on a property with a rateable value of £12,000 or less, if that is the only property the business uses.
• Rural rate relief: a business in an eligible rural area with a population below 3,000 could get this relief, and an eligible business will not pay business rates.
• Charitable rate relief: this gives up to 80% off the bill, and the local council may be able to top up the discount so that no business rates are paid.
• Heat networks relief: no business rates are paid on a property that is eligible for it.
• Hardship relief: councils can reduce or cancel a business rates bill.
• Enterprise zone relief: a business starting up or relocating to an enterprise zone could qualify, with up to £55,000 in relief per year over 5 years.
• Freeports relief: a business based in a freeport could qualify, and the relief runs for 5 years from the day it was first received.

Charitable rate relief and small business rate relief cannot be received at the same time. ^[2] Empty property relief is temporary: it removes business rates on an empty property for 3 months, after which most businesses must pay full business rates.

For rural rate relief, the eligible businesses include the only village general store, food shop or post office with a rateable value of up to £8,500, and the only public house or petrol station with a rateable value of up to £12,500. If there is more than one business in the area, both businesses can still apply if they are different types of business, for example a public house and a food shop.

What is happening to business rates in 2026?

A revaluation took effect in England and Wales on 1 April 2026, with rateable values based on rental values at 1 April 2024. ^[3] Multipliers are revised at revaluation too, so a change in rateable value does not always mean a change in the bill.

In England, from 1 April 2026 to 31 March 2027, the standard multiplier is 48p and the small business multiplier, used where the rateable value is below £51,000, is 43.2p. Retail, hospitality and leisure rate relief has been replaced with two new rate multipliers. Retail, hospitality or leisure businesses with a rateable value below £51,000 use the small business retail, hospitality and leisure multiplier, which is 38.2p from 1 April 2026 to 31 March 2027.

Supporting small business relief may be available to a business that lost some or all of its small business rate relief or rural rate relief because of the revaluation on 1 April 2026. Transitional relief limits how much a bill can change each year as a result of revaluation.

Eligible pubs and live music venues in England receive a 15% reduction on their business rates bills for the 2026/27 financial year, and the government announced that their bills would be frozen in real terms in 2027/28 and 2028/29. ^[4] For this relief, a pub is a property open to the general public that allows free entry other than when occasional entertainment is provided, allows drinking without requiring food to be consumed and permits drinks to be purchased at a bar. Restaurants, cafes, nightclubs, snack bars, hotels and guesthouses are among the property types excluded from the meaning of a pub, the list of exclusions is not exhaustive, and the local council decides cases where eligibility is unclear.

Legislation behind the 2026/27 pubs and live music venues relief

In England, councils grant the 2026/27 pubs and live music venues relief using their discretionary relief powers under section 47 of the Local Government Finance Act 1988 (as amended). ^[4] The government reimburses councils for that relief with a grant under section 31 of the Local Government Act 2003. Councils also have wider discretionary relief powers introduced by the Localism Act 2011, which are not funded by section 31 grants.

A property wholly or mainly used as a nightclub or a theatre, for the purposes of the Town and Country Planning (Use Classes) Order 1987 (as amended), is not a live music venue for this relief. Pubs relief awards are likely to amount to subsidies, so the government will take steps to comply with the Subsidy Control Act 2022. Councils have an obligation to report individual reliefs worth over £100,000.

Business rates are handled differently for property in Scotland or Northern Ireland, and in Northern Ireland, Land and Property Services (LPS) works out business rates.

Checking an exemption or a valuation

For help with a business rates bill or rate relief, the contact is the local council; for help with rateable value, it is the VO. A business rates valuation account can be used to report changes to a property, such as floor area sizes and parking, and to challenge its rateable value.

A check case comes first, and a challenge to the current valuation can then be made within 4 months of receiving the check case decision, within 16 months of the check case submission if the challenge is about a change in the surrounding area (such as roadworks), or if the Valuation Office has not made a decision on the check case after 12 months. ^[5] A challenge needs valid grounds, which can include that the property should not be valued at all. A rateable value and business rates bills may go up, down or remain the same following a challenge.

To check whether a property is exempt from business rates, contact the Valuation Office (VO), or report that the property should be exempt using a business rates valuation account. Changes to a property or business that could affect the bill should then be reported to the VO.