Introduction
Business rates are an important ongoing cost when buying commercial property at auction. Understanding how rates are calculated — and what reliefs may be available — will help you assess the true affordability of a property before bidding.
This guide explains how business rates work, how they are calculated, and what auction property buyers should consider in 2026.
Business Rates on a Commercial Property for Auction
Business rates are a local tax payable on most non-domestic properties in England and Wales. Liability usually falls on the occupier, although owners can become responsible where a property is vacant.
Business rates are calculated using two key components:
Business Rates Bill = Rateable Value × Multiplier
- Rateable Value (RV) — set by the Valuation Office Agency (VOA), representing the property’s estimated rental value at a specific valuation date.
- Multiplier (Uniform Business Rate) — set annually by the UK Government.
The current rating list came into force in April 2023, based on rental values as at 1 April 2021. Revaluations now occur more frequently than historically, helping reflect market conditions more accurately.
2026 Business Rates Multipliers (England)
Multipliers are updated annually and may change each financial year. As a guide, recent multipliers have been approximately:
Property Type | Multiplier (England) |
Small Business Multiplier | ~49p in the pound |
Standard Multiplier | ~54p in the pound |
London does not have a separate multiplier — the same national multiplier applies.
Wales and Scotland operate separate rating systems and multipliers.
Buyers should always check the latest figures published by HM Treasury or local authorities before committing to a purchase.
Example calculation
If a commercial property has a rateable value of £15,000 and qualifies for the small business multiplier:
Business rates = £15,000 × 0.49
= £7,350 per year (before reliefs)
Reliefs or exemptions may significantly reduce this figure.
Revaluations and appeals
The VOA reviews rateable values periodically to reflect market rental levels. If you believe the rateable value is incorrect, you can challenge it through the Check, Challenge, Appeal process.
Professional rating surveyors often assist with appeals and may reduce liability where valuations are excessive.
Business rates relief available to buyers
Several relief schemes may apply depending on the property and business circumstances.
Small Business Rates Relief (SBRR)
You may qualify if:
- The property’s rateable value is below £15,000 (England)
- You occupy only one property (with limited exceptions)
Relief structure (England):
- RV up to £12,000 → up to 100% relief
- RV £12,001 to £15,000 → tapered relief
- RV below £51,000 → small business multiplier may apply
This relief is one of the most common benefits for smaller auction purchases.
Retail, Hospitality and Leisure Relief
Temporary government relief schemes have applied in recent years for certain sectors such as:
- Shops
- Restaurants and cafés
- Leisure and hospitality venues
Relief levels vary annually depending on government policy. Buyers should confirm current eligibility before relying on this support.
Transitional Relief
Transitional arrangements may limit increases or decreases in rates following revaluation. This is applied automatically by local authorities where applicable.
Rural Rate Relief
Properties in designated rural settlements may qualify for relief if they provide essential local services, such as:
- Village shops
- Post offices
- Public houses
- Petrol stations
Mandatory relief is typically 50%, with discretionary top-ups available from local authorities.
Exemptions from Business Rates
Certain properties may be exempt, including:
- Agricultural land and buildings
- Places of public religious worship
- Buildings used for disabled welfare or training
- Some charitable properties
Exemptions depend on usage and legal classification.
Empty Property Rates Relief
If you buy a vacant commercial property at auction, relief may apply initially:
- Offices and retail → 3 months relief
- Industrial / warehouse → 6 months relief
After this period, full rates usually become payable unless further exemptions apply.
Additional exemptions may exist for:
- Listed buildings
- Charitable ownership
- Low rateable value properties
- Insolvent occupiers
Vacancy costs are a key risk factor when purchasing investment property at auction.
Why business rates matter when buying at auction
Business rates should be considered alongside:
- Purchase price
- SDLT (Stamp Duty Land Tax)
- Finance costs
- Refurbishment costs
- Rental income potential
A property with a low purchase price but high rates liability may represent poor value overall.
Equally, opportunities exist where rates can be reduced through appeals or relief eligibility.
Professional Advice
Commercial property buyers often consult:
- Rating surveyors
- Commercial agents
- Property tax advisers
- Solicitors
Specialist advice can identify savings and prevent unexpected liabilities.
Summary
Business rates are a significant ongoing cost when buying commercial property at auction. Understanding how they are calculated, what reliefs may apply, and whether the valuation is accurate will help you make informed investment decisions and avoid unexpected expenses.
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