Small business rates in London, explained

Business rates are the tax on occupying commercial property, and they are one of the largest fixed costs a small London business carries. They are also widely misunderstood, which costs people money in both directions: some pay a bill they are entitled not to pay, and others assume a relief applies when it does not.

Rateable value is an estimate of rent, not of you

Everything starts with the rateable value. It is the Valuation Office Agency's estimate of the annual open-market rent for your property at a fixed valuation date. It is not the rent you actually pay, and it has nothing to do with your turnover or your profit.

That is why two shops side by side can pay different amounts, and why a quiet year does not reduce your bill. Rateable values change at a revaluation, not when trade dips.

The relief that matters most

Small business rate relief is the one worth knowing in detail, because at the bottom of the scale it removes the bill entirely. GOV.UK states the rule plainly: "You will not pay business rates on a property with a rateable value of £12,000 or less, if that's the only property your business uses."

Above that it tapers rather than stopping abruptly. For rateable values between £12,001 and £15,000, GOV.UK says "the rate of relief will go down gradually from 100% to 0%", and gives worked examples: a rateable value of £13,500 attracts 50% relief, and £14,000 attracts 33%.

The practical consequence is that the band between £12,000 and £15,000 is where small changes in valuation have outsized effects on what you owe. If your property sits near either edge, the valuation is worth checking carefully.

The London threshold that is easy to miss

If your business uses more than one property, the relief does not simply disappear. The additional conditions are that none of the other properties has a rateable value above £2,899, and that the total rateable value of everything you occupy stays under a cap.

That cap is where London differs: GOV.UK gives £20,000 nationally and £28,000 in London. If you run two or three small sites in the capital, you may still qualify on a combined value that would disqualify a business elsewhere in England. It is worth doing the arithmetic rather than assuming.

Check your own valuation before you do anything else

Your rateable value is public. You can look up your property through the Valuation Office Agency and see the valuation and the detail behind it, including the measurements and the categories used.

Read the detail, not just the number. Valuations are built from floor areas and the use of each part of the property, and errors there are the most common reason a figure is wrong: a mezzanine counted as retail space rather than storage, or an area measured as it was before a change.

If something looks wrong, the route is to check first and then challenge through the VOA. Be sceptical of unsolicited approaches from firms promising to cut your rates for a share of the saving; you can start the process yourself, at no cost, and you should know what the claim is before anyone makes it on your behalf.

What to budget for

Two things should be in your forecast. The first is revaluation: rateable values are periodically reassessed, and a rise can move you out of a relief band. The second is that reliefs are policy, not entitlements in perpetuity. Schemes aimed at particular sectors come and go with budgets, so a bill that was discounted this year may not be next.

If your rateable value sits just under a threshold, treat the relief as something to re-check annually rather than a settled feature of your cost base.

How we checked this

Facts in this piece were taken from the primary sources below and checked on 6 October 2026. Rules and figures change: check the source before you act on anything here.

• GOV.UK: small business rate relief — the thresholds, taper examples and multi-property conditions quoted above
• Valuation Office Agency, GOV.UK: check and challenge your business rates valuation