Business rates when you take over premises: what bill comes with them

Contents

1. Who pays business rates on the day you take over
2. A worked example: four takeover dates and the sums
3. What the previous occupier paid, and the documents to request
4. Asset sale, share sale, new lease or freehold: who becomes the ratepayer

1. Who pays business rates on the day you take over

Short answer: In England and Wales the ratepayer is whoever occupies the property on a given day, so your liability begins on the day you take occupation, not on the day a contract is signed. The council works out the bill one day at a time.

Business rates are a tax on the use of a building or part of a building for non-domestic purposes, which covers most shops, offices and pubs [GOV.UK, Introduction to business rates]. The unit that gets taxed is called a hereditament: one property that appears as a single entry in the local rating list, which is the register of rateable properties each council keeps. The legal rule that tells you who pays is section 43 of the Local Government Finance Act 1988. It makes the ratepayer the person who occupies all or part of the hereditament on any day in the year, provided the hereditament appears in the local rating list for that year [LGFA 1988 s.43(1)].

The words "on any day" matter more than any other part of the section. The bill is not a yearly sum that follows the property. It is the total of a chargeable amount for each chargeable day, and each day belongs to whoever occupied the property on it [LGFA 1988 s.43(2), (3)]. Our conclusion for you as a buyer: the seller owes the days up to the handover, you owe the days from the handover, and the two bills are separate documents in separate names.

The amount for one day follows a formula that Schedule 4ZA of the 1988 Act sets out. Take the rateable value shown for that day, multiply it by the multiplier, and divide the result by the number of days in the financial year [LGFA 1988 Sch 4ZA para 1]. The financial year runs from 1 April to 31 March, which gives 365 days in 2026-27. The multiplier is a pence-in-the-pound figure: in England the Treasury prescribes it, and in Wales it is calculated under Schedule 7 of the same Act [LGFA 1988 Sch 4ZA para 1]. These provisions apply to financial years beginning on or after 1 April 2024. From that date the Non-Domestic Rating Act 2023 reshaped section 43 and removed its older subsections [LGFA 1988 s.43, note on amendments]. A reader who finds an older guide describing the previous wording should check its date.

The rateable value is the figure the Valuation Office Agency, the government valuation body, puts on the property for rating. The Valuation Office sets it, and the local council uses it to work out the bill [GOV.UK, Correct your business rates]. You pay the money to the billing authority, which is the council whose rating list shows the property [LGFA 1988 s.43(7), (8)]. So you deal with two bodies: the Valuation Office on the value, and the council on the bill, the relief and the payment.

What does this mean on the day the keys change hands? The date that counts is the day you occupy, so the handover date in the sale agreement should match the day you actually take possession and begin trading. If the contract says completion is on the 1st and you start fitting out on the 15th, the council may see occupation from the day the premises are yours to use. That is our reading of the word "occupies", not a rule the statute spells out for fit-outs. The safe course is to agree one handover date in writing and tell the council that date.

A second structural point concerns the year in which a bill shows up. The rule makes a new ratepayer liable for the part-year from the handover. You may not receive a bill on day one. Councils issue demand notices after they learn of the change, and a notice can cover a period that has already passed.

2. A worked example: four takeover dates and the sums

Short answer: With a rateable value of £18,000 and the Welsh standard multiplier of 0.502, the year's charge is £9,036, and your share depends only on how many days remain after the handover. Four handover dates give four different bills, and each pair of seller and buyer shares adds back to £9,036.

The Welsh Government states a standard multiplier of 0.502 for 2026-27, a retail multiplier of 0.350 and a higher multiplier of 0.515 [Welsh Government, 2026-27 revaluation page]. We use 0.502 here because it is a published figure for the year. The rateable value is invented. Any other value scales the sums in the same proportion.

Illustrative figures. Rateable value £18,000. Standard multiplier 0.502. No relief applies, which means the example shows the full charge before any reduction. Financial year 1 April 2026 to 31 March 2027, which is 365 days.

Step one is the annual charge: 18,000 × 0.502 = £9,036.00. Under the formula the daily charge is that sum divided by 365, which is £24.756 a day [LGFA 1988 Sch 4ZA para 1]. Step two counts the days you occupy, from your first day to 31 March, both ends included. Step three multiplies.

Here is the working for the 1 September row, so that you can repeat it with your own figures. The days from 1 April to 31 August are 30 + 31 + 30 + 31 + 31 = 153. The days from 1 September to 31 March are 30 + 31 + 30 + 31 + 31 + 28 + 31 = 212. Check: 153 + 212 = 365. The seller's bill is 9,036 × 153 ÷ 365 = £3,787.69. Your bill is 9,036 × 212 ÷ 365 = £5,248.31.

Check line. £3,787.69 + £5,248.31 = £9,036.00, the full annual charge. The same check works for the other three rows: £1,510.13 + £7,525.87 = £9,036.00; £6,040.50 + £2,995.50 = £9,036.00; £7,575.39 + £1,460.61 = £9,036.00.

What does the table tell a buyer? First, a handover three months later cuts your first-year bill by about 30%, as the move from 1 June to 1 September shows: £7,525.87 down to £5,248.31. Second, one day of delay is worth £24.76 at this rateable value. If a completion slips by 10 days, the seller's bill grows and yours shrinks by about £247.56, and the figure is for you to reflect in the price discussion if the seller keeps the keys.

Third, and most useful for price talks, the table shows which half of the year the seller is paying for. A seller who hands over on 1 February has paid for 306 days. If the seller asks you to "reimburse the rates", the question is which days they mean, and the table gives you the figure to test their number against.

How to repeat the sum for your own premises takes five steps. Look up the rateable value. Find the multiplier on the seller's latest bill. Multiply the two and divide by 365. Count your days from the handover to 31 March. Multiply. If the sum on your first bill from the council differs from yours, the difference points to a relief, a change in value, or a different handover date, and each of those is a specific question for the council.

3. What the previous occupier paid, and the documents to request

Short answer: The council account and the demand notice show what the seller was charged, and your own bill is a fresh calculation from the handover date. A seller's old bill is useful for three facts: the rateable value, the multiplier and the reliefs that applied. It does not predict your bill.

Start with the legal position, because it decides what you actually need. Each day belongs to the ratepayer for that day [LGFA 1988 s.43(1)–(3)]. Our conclusion for you: a seller's unpaid rates for days before your handover are an account between the seller and the council, and they do not become your bill because you bought the business. Section 43 attaches each day to the occupier of that day, so an earlier occupier's days stay where they fell. Buying the shares of the company that occupies the premises is the exception to that reading, and section 4 explains why.

If arrears do not pass to you, why look at the seller's payments at all? Because the seller's bill answers questions that bear on your own sums. It shows which rateable value the council applied, which multiplier, and which reliefs reduced the charge. It also shows whether the seller was paying in instalments and whether the account was up to date. Each of these changes what you will pay or what you should ask the seller to settle before handover.

The Valuation Office service on GOV.UK shows the rateable value of properties in England and Wales, lets you check the values of similar properties, and explains how the value was calculated [GOV.UK, Find a business rates valuation]. It is a valuation tool. Our conclusion is that payment history sits elsewhere, because the council issues the bill and takes the money [LGFA 1988 s.43(7), (8)]. That is why the request goes to the seller, not to the valuation service.

Here is the list of documents to request, with the reason for each and the line to read. Each one names a period, so that the seller can answer with a file, not a promise.

1. The current-year demand notice, in full. Ask for the notice for 2026-27 and any revised notice issued since. The notice is the council's own statement of what it charges for the property. Read these lines in turn: the property address and description, because they show which entry in the rating list the bill is for; the rateable value; the multiplier used; the period charged; each relief and its amount; and the instalment table with dates.
2. The council account statement up to the handover date. Ask for a statement from the council showing every charge, payment and balance for the property from 1 April 2025 to today. A balance on this statement is the seller's debt for the seller's days. Its size tells you how the seller has treated the account, and it is a figure to settle in the sale price or in a written agreement before you complete.
3. Every relief award letter in force. Ask for the letters that granted small business rate relief, supporting small business relief, retail, hospitality and leisure relief, rural relief, or pubs relief, with the start date of each. A relief appears on the bill as a deduction, and the letter shows the conditions behind it.
4. Valuation Office correspondence from 1 April 2025. Ask for any letter about a change to the rateable value, a request to change it, or a challenge to it. GOV.UK says you use your business rates valuation account to report a change to the property or to challenge the value [GOV.UK, Correct your business rates]. A challenge in progress may change the value that applies to the days you will occupy, so you need to know it exists before you commit to a price.
5. Any record of the property being empty in the last three years. Ask for the dates the property stood empty and the council's letters about empty property relief.

Each item names a document and a period, which keeps the request factual. You are not asking the seller to explain anything. You are asking for papers that the seller already holds, and that the council already holds too.

What does a seller's old bill mislead on? Two things. First, a relief on the seller's bill may not apply to you. England's small business rate relief is a relief that you request from your own local council [GOV.UK, Small business rate relief]. Our conclusion is that a buyer checks eligibility afresh and does not take over the seller's award. Second, the rateable value may change. If the Valuation Office has revised the value, the notice you receive in your own name will use the new figure for the days it applies to.

Here is a short example of the check in practice. Illustrative figures. A seller's 2026-27 notice shows a rateable value of £18,000, the Welsh standard multiplier of 0.502, and no relief. You calculate 18,000 × 0.502 = £9,036 for the year. The account statement shows two instalments paid and none overdue. The handover is on 1 September, so the seller owes 153 days and you owe 212 days, as in the table in section 2. Check: £3,787.69 + £5,248.31 = £9,036.00. If the statement showed an overdue balance, that sum would be the seller's to clear, and you would ask for it to be cleared before completion.

4. Asset sale, share sale, new lease or freehold: who becomes the ratepayer

Short answer: The ratepayer is the occupier, so the answer follows who occupies after the deal. In an asset sale you become the occupier on handover. In a share sale the company stays the occupier and keeps its history.

An asset sale means you buy the business's assets, such as stock, equipment and goodwill, and take over the premises by an assignment of the existing lease or by a new lease. In both cases you start to occupy on the handover day and the seller stops. Our conclusion from the day-by-day rule: you are the ratepayer from that day, and the seller is the ratepayer up to the day before [LGFA 1988 s.43(1)]. The bill you receive covers your days only. Section 2 shows the split in pounds.

A share sale is different. You buy the shares of the company that occupies the premises, and the company remains in occupation throughout. The ratepayer does not change on any day, so no new bill starts and no split takes place. Our conclusion for this buyer: whatever the company owes the council on completion day stays with the company, and you now own the company. That includes any arrears, any open challenge to the rateable value, and any relief the company has been getting.

For a share purchase the document list in section 3 matters more, not less. The account statement shows a debt you are about to inherit through the company. A relief award shows what the company has been getting, and the company stays eligible only while the conditions behind it still hold. The guidance on supporting small business relief says that a change of ratepayer or a vacancy after 31 March 2026 does not affect eligibility, while eligibility ends if a charity or Community Amateur Sports Club occupies the property [GOV.UK, Supporting Small Business Relief guidance, paras 11 and 28]. A share sale changes the shareholders, not the ratepayer.

A new lease from the landlord is the third route. You become the occupier when you take possession. The landlord stays the owner and pays rates only if the property is unoccupied in a class that the regulations prescribe, and then only for the period the regulations allow [LGFA 1988 s.45(1), (2)].

A freehold purchase splits again. If you buy a freehold with a tenant in place, the tenant is the occupier and the ratepayer. Our conclusion is that your position as owner does not make you liable for the tenant's days. If you buy a vacant freehold, you are the owner of an unoccupied property, and section 45 can make you liable once the property falls into a prescribed class. The classes can depend on physical characteristics of the property or on how long it has been empty [LGFA 1988 s.45(9), (10)]. If you buy a freehold and move in yourself, you are the occupier from that day, as in an asset sale.

A table sets the four routes side by side. It states the conclusion for each, and the document to request.

Sources

All pages were retrieved on 2026-11-06.

1. Local Government Finance Act 1988, section 43 (legislation.gov.uk), retrieved 2026-11-06: https://www.legislation.gov.uk/ukpga/1988/41/section/43
2. Local Government Finance Act 1988, section 45, retrieved 2026-11-06: https://www.legislation.gov.uk/ukpga/1988/41/section/45
3. Local Government Finance Act 1988, Schedule 4ZA, retrieved 2026-11-06: https://www.legislation.gov.uk/ukpga/1988/41/schedule/4ZA
4. GOV.UK, Find a business rates valuation, retrieved 2026-11-06: https://www.gov.uk/find-business-rates
5. GOV.UK, Introduction to business rates, retrieved 2026-11-06: https://www.gov.uk/introduction-to-business-rates
6. GOV.UK, Correct your business rates, retrieved 2026-11-06: https://www.gov.uk/correct-your-business-rates
7. GOV.UK, Small business rate relief, retrieved 2026-11-06: https://www.gov.uk/apply-for-business-rate-relief/small-business-rate-relief
8. GOV.UK, 2026 Supporting Small Business Relief local authority guidance, retrieved 2026-11-06: https://www.gov.uk/government/publications/business-rates-relief-2026-supporting-small-business-relief-local-authority-guidance/business-rates-relief-2026-supporting-small-business-relief-local-authority-guidance
9. Welsh Government, 2026-27 revaluation page, retrieved 2026-11-06: https://www.gov.wales/node/72900