How Business Rates Work for Hotels, B&Bs, Pubs and Holiday Lets
Business rates — non-domestic rates in Scotland and Wales — are the local property tax paid on almost every commercial building in the UK, and hospitality premises are no exception. A hotel, guest house, B&B, pub with rooms, restaurant, café, campsite or self-catering business that is assessed for rates pays an annual bill to its local council. The bill has two ingredients: the rateable value, which the Valuation Office Agency (in England and Wales) or the Scottish Assessors set as the property's estimated open-market annual rent at a fixed valuation date, and the multiplier, a pence-in-the-pound figure set each year by the UK, Scottish or Welsh government. Multiply one by the other and you have the gross bill; deduct any reliefs you qualify for and you have what you actually pay. The calculator above performs exactly those steps for the tax year you select, using the multipliers and relief rules published for that year.
Business Rates Formula
Gross bill = Rateable Value × Multiplier
Net bill = Gross bill − Small Business Relief − Sector Relief (capped at £110,000 per business) − Other Relief
Take an illustrative example — not a valuation or a benchmark. A 14-bedroom guest house in England has a 2026 rateable value of £42,000. As a hospitality property under £51,000 it uses the 38.2p small business RHL multiplier, so the gross bill is £42,000 × 0.382 = £16,044. Small Business Rate Relief does not apply because the rateable value is above £15,000, and England's percentage RHL relief no longer exists, so the estimated 2026/27 bill is £16,044 — about £1,604 in each of ten monthly instalments, or £1,146 per letting room a year. A four-room B&B in England with a rateable value of £13,500 fares very differently: £13,500 × 0.382 = £5,157 gross, less 50% tapered Small Business Rate Relief, leaves about £2,579.
2026/27 Business Rates Multipliers
Every figure below is for the tax year 1 April 2026 to 31 March 2027 and applies to rateable values from the 2026 rating lists. They were checked against GOV.UK, gov.scot and Business Wales on 23 September 2026. Multipliers are re-set each spring, so always confirm the year on your bill.
| Nation | Rateable value band | Multiplier | Who it applies to |
|---|---|---|---|
| England | Under £51,000 | 38.2p | Retail, hospitality and leisure (RHL) properties — hotels, B&Bs, guest houses, self-catering, pubs, restaurants, cafés, caravan parks |
| England | £51,000 – £499,999 | 43.0p | RHL properties |
| England | Under £51,000 | 43.2p | All other small properties |
| England | £51,000 – £499,999 | 48.0p | All other standard properties |
| England | £500,000 and above | 50.8p | Every property, including hospitality |
| Scotland | Up to £51,000 | 48.1p | Basic Property Rate |
| Scotland | £51,001 – £100,000 | 53.5p | Intermediate Property Rate |
| Scotland | Over £100,000 | 54.8p | Higher Property Rate |
| Wales | Up to £100,000 | 50.2p | Standard multiplier (the 35.0p retail multiplier is for shops only) |
| Wales | Over £100,000 | 51.5p | Higher multiplier |
Why England Replaced RHL Relief With Lower Multipliers
For five years English hospitality businesses received a temporary percentage discount — 75% at its peak, 40% in 2025/26, capped at £110,000 per business. That scheme ended on 31 March 2026. In its place the government introduced two permanently lower multipliers for retail, hospitality and leisure properties with a rateable value below £500,000, funded by a higher multiplier on the largest properties. The change matters for your arithmetic in two ways. First, there is no longer a percentage to deduct in England: the discount is already inside the 38.2p or 43.0p rate. Second, for many properties the new arrangement is worth less than the old relief. Our £42,000 guest house would have paid £42,000 × 49.9p = £20,958 less 40% = £12,575 under the 2025/26 rules, against £16,044 now — and that is before any change to the rateable value itself at revaluation. Use the tax year selector to see both years side by side, remembering that the rateable value you enter should come from the rating list in force for that year.
Small Business Rate Relief
Small business relief removes or reduces the bill on the smallest properties, and it is the reason many B&Bs and small holiday lets pay little or nothing. In England the relief is 100% up to a rateable value of £12,000, tapering in a straight line to 0% at £15,000, and it normally requires the property to be your only business premises (other properties are allowed only if each is below £2,900 and the total stays under £20,000, or £28,000 in London). Scotland's Small Business Bonus Scheme gives 100% up to £12,000, tapers to 25% at £15,000 and to 0% at £20,000, subject to a combined rateable value of £35,000 across all your Scottish properties. Wales gives 100% up to £6,000 and tapers to 0% at £12,000. Because these reliefs depend on the ratepayer's other properties rather than the building itself, a relief the current owner enjoys will not necessarily pass to a buyer who already occupies premises elsewhere — one of the most common surprises in a hospitality purchase.
Hospitality Reliefs in Scotland and Wales for 2026/27
Scotland has kept a percentage relief alongside its poundage. For 2026/27, retail, hospitality and leisure premises with a rateable value of £100,000 or less receive 15% relief, and licensed hospitality premises and music venues — pubs, restaurants, hotels, night clubs and licensed clubs — receive 40%, both capped at £110,000 per business across all its properties. A licensed hotel in Scotland with a rateable value of £80,000 therefore pays £80,000 × 53.5p = £42,800 gross, less 40% (£17,120), leaving £25,680. Islands hospitality premises may qualify for a separate 100% relief that the calculator does not model. Wales offers a narrower Food and Drink Hospitality Rates Relief of 15% for 2026/27, again capped at £110,000, for pubs, restaurants, cafés, bars and live music venues; properties used mainly for living accommodation — hotels, guest houses, holiday homes and caravan parks — are expressly excluded, so a Welsh B&B relies on small business relief alone. A Welsh pub with a rateable value of £30,000 pays £30,000 × 50.2p = £15,060 gross, less 15% (£2,259), leaving £12,801.
The 2026 Revaluation and Transitional Relief
All three nations revalued every non-domestic property with effect from 1 April 2026, using rental evidence from 1 April 2024. Hospitality rateable values moved a great deal — some seaside guest houses and country pubs rose sharply as rents recovered from the pandemic years, while some city-centre hotels fell — and each government lowered its multipliers so that the revaluation raised no extra revenue overall. That does not mean individual bills stood still, which is why transitional relief exists. In Wales, ratepayers whose bill rose by more than £300 pay only a third of the increase in 2026/27 and two thirds in 2027/28. England and Scotland run their own schemes that cap year-on-year increases by property size through to 2029. Because transitional relief depends on what you paid last year and on your council's calculation, this tool does not estimate it: if your bill or your rating adviser tells you the amount, enter it as a percentage in the "other relief" field and the calculator will apply it after the statutory reliefs.
Holiday Lets, Self-Catering and the Rating Threshold
Self-catering property is only rated if it clears the letting thresholds; otherwise it stays on council tax. In England a holiday let must be available for short lets for at least 140 nights in the year and actually let for 70; in Wales the tests are 252 nights available and 182 nights let, and the Welsh Government has refined how those criteria are applied from April 2026. Scotland requires 140 nights available and 70 let. Once a property is on the rating list it is treated like any other hospitality premises for multipliers and reliefs, and because holiday-let rateable values are often modest, a single cottage frequently falls entirely within small business relief. A portfolio of several cottages will not, because the only-property condition fails — a point buyers of small self-catering businesses should model carefully.
Business Rates as a Running Cost When Buying
For a buyer, business rates belong in the fixed-cost line of the forecast next to insurance, utilities and finance: they are payable whether the rooms are full or empty, they are set by someone else, and they rise at revaluation. Three checks protect you. Look up the property's 2026 rateable value yourself on the VOA or Scottish Assessors website rather than relying on the sales particulars — the list is public and free. Compare the calculator's figure with the rates line in the seller's accounts and ask about any gap; reliefs that depended on the seller's circumstances, such as small business relief on their only property, may not survive the sale. And check whether the seller has an outstanding appeal against the rateable value, because a successful challenge passes to you while a pending one is uncertain income. Run the annual figure through the Profit Predictor or the Break-Even Calculator to see what it does to margin and required occupancy.
Reducing a Business Rates Bill
Most reductions come from the rateable value rather than the multiplier. You can check the property's description and the floor areas, room counts and facilities the valuer used, and challenge the assessment through the Check, Challenge, Appeal process in England and Wales or a proposal to the Assessor in Scotland if the facts are wrong or comparable properties are assessed more favourably. Make sure every relief you qualify for has actually been applied — councils do not always do so automatically, and Scottish and Welsh hospitality reliefs generally need an application. Empty parts of a property, seasonal closures and partly completed refurbishments can all affect liability, and rural rate relief, charitable relief and hardship relief exist for specific circumstances. Be wary of firms cold-calling with guaranteed savings for an up-front fee; the professional route is a member of the Royal Institution of Chartered Surveyors or the Institute of Revenues, Rating and Valuation working on results.
Limitations of This Estimate
Every figure is calculated from the rateable value and options you enter using the published multipliers and statutory relief formulas for the tax year selected. The calculator assumes the property is occupied and is correctly described in the rating list as the type you chose; it cannot verify eligibility for the RHL multiplier or any relief, does not know about your other properties, does not model transitional relief, rural rate relief, charitable relief, empty property relief, islands relief, the London Crossrail supplement or Business Improvement District levies, and does not apportion mixed-use premises where part of the building is domestic. Multipliers and relief schemes change at every Budget and every revaluation. Treat the result as a planning estimate that shows the arithmetic, and confirm the real bill with the council or a qualified rating adviser before you rely on it.
Related Stay4Hospitality Tools
Business rates are one line in the cost of owning a hospitality property. Estimate the tax on the purchase itself with the Stamp Duty Calculator, test whether the trade supports the borrowing with the Finance Affordability Checker, and judge the asking price against the numbers with the Deal Analyser and the Investment Analyser. Build the full cost base with the Staff Cost Planner and the Cash Flow Forecast, and work through the wider checks with the Due Diligence Analyser. Then browse hospitality properties for sale, hotels for sale, B&Bs for sale and pubs for sale, or, if you are the owner, list your property on Stay4Hospitality.