Business rates are a local tax on commercial properties that every London office tenant must pay to their council. The amount depends on your office’s rateable value, which reflects its rental market worth, and the government multiplier, which determines how much you owe per pound of value.
For 2025, most businesses will pay between £20 and £50 per square foot annually in business rates, depending on location and building type. In Central London, rates can account for up to half of your total occupancy costs, making them a crucial factor when budgeting for office space.
According to the Greater London Authority, business rates raise over £9 billion annually, making them one of the largest sources of local government funding in London.
How Are Business Rates Calculated?
Business rates are worked out by multiplying your property’s rateable value by the annual multiplier set by the government.
For the 2024–25 tax year:
The standard multiplier is 54.6p per £1 of rateable value.
The small business multiplier (for properties under £51,000) is 49.9p per £1.
Example:
If your office has a rateable value of £60,000, your annual business rates would be approximately £32,760 (60,000 × 0.546).
Rateable values are assessed by the Valuation Office Agency (VOA) and based on rental market conditions as of April 2021, remaining fixed until the next revaluation in 2026.
How Do Business Rates Vary by Area?
Although the multiplier is consistent across London, rateable values differ sharply by location. Prime Central London postcodes such as Mayfair, Soho, and Covent Garden command significantly higher assessments than outer boroughs.
| London Area | Typical Rateable Value (per sq ft) | Approx. Annual Cost (per sq ft) |
|---|---|---|
| Mayfair / St James’s | £110–£130 | £60–£70 |
| Soho / Covent Garden | £90–£110 | £50–£60 |
| City of London | £80–£100 | £45–£55 |
| Green Park / Victoria | £70–£90 | £40–£50 |
| Shoreditch / Old Street | £55–£75 | £30–£40 |
| Canary Wharf | £50–£70 | £28–£38 |
| Hammersmith / Fulham | £40–£55 | £22–£30 |
| Croydon / Stratford | £25–£35 | £15–£20 |
These figures show how location can double or even triple your business rates, even for offices of the same size.
Can Tenants Get Business Rate Relief?
Yes, several relief schemes exist to help eligible tenants reduce their bills. The most common are:
Small Business Rate Relief – For offices with a rateable value below £15,000 (phased out up to £51,000).
Retail, Hospitality and Leisure Relief – Covers 75% of rates for eligible sectors.
Empty Property Relief – Offers up to three months’ exemption for vacant premises.
If you believe your property is overvalued, you can also challenge your rateable value through the VOA’s Check, Challenge, Appeal process. However, it requires solid market evidence and can take several months to resolve.
Do I Pay Business Rates in a Serviced or Shared Office?
It depends on your agreement. If you rent a private office with exclusive occupation, you’re usually responsible for paying business rates directly.
However, many serviced office and co-working operators include business rates within their all-inclusive monthly fee. This simplifies budgeting, but it also means the actual cost of business rates is hidden within your rent.
For shared spaces or hot desks, the operator is typically the liable party, as tenants don’t have exclusive control of the area.
When Do Business Rates Start and How Often Do They Change?
You start paying business rates from the date your lease begins — even if you haven’t moved in yet. Bills are issued annually by your local council, with the option to pay in 10 or 12 monthly instalments.
The government updates the multiplier every year, usually in line with inflation, while rateable values are reviewed every five years. The next official revaluation will take place in April 2026.
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