Do sole traders need to register for business rates?

Do sole traders need to register for business rates?

Business rates can feel like one of those topics that only applies to “proper businesses” with big offices, shopfronts, or warehouses. If you’re a sole trader working on your own, it’s easy to assume it either doesn’t apply to you at all—or that you’ll suddenly get a surprise bill once you start earning. The reality sits somewhere in the middle: some sole traders will never pay business rates, some will need to pay them, and others might technically be liable but end up paying nothing because of reliefs. Understanding when and why business rates apply can save you money, avoid headaches with the council, and help you plan costs properly as you grow.

This article breaks down what business rates are, who they apply to, what “registering” actually means in practice, and what you should do in common sole trader scenarios—especially working from home, renting a small space, using shared premises, or running a customer-facing setup like a studio or shop. We’ll also cover relief schemes, how valuation works, what happens if you don’t tell anyone you’re occupying a property, and how to handle it if you’re just starting out and aren’t sure where you stand.

What are business rates, in plain English?

Business rates are a tax charged on non-domestic property. In the UK, they’re broadly the commercial equivalent of council tax for homes. They help fund local services and are usually billed by your local council based on information from the Valuation Office Agency (VOA) about the property’s “rateable value.”

The key thing to understand is that business rates are linked to a property, not directly to a business structure. Being a sole trader doesn’t automatically mean you do or don’t pay. A limited company can be exempt in some situations and liable in others, and the same is true for sole traders. The deciding factors are the type of premises you use, how you use them, and whether the space is considered non-domestic for rating purposes.

Business rates usually apply to properties such as shops, offices, pubs, factories, warehouses, workshops, and many types of commercial units. They can also apply to parts of properties if those parts are used primarily for business, even when the rest is a home. That’s where many sole traders start to worry—especially those who use a spare room as an office or store equipment at home.

What does “registering for business rates” actually mean?

People often say “register for business rates,” but there isn’t always a simple sign-up form in the way there is for things like self assessment. In many cases, business rates liability is triggered because a property is already on the business rating list and the council issues a bill to whoever is occupying it.

However, there are situations where you might need to contact the council proactively, particularly if:

1) You move into a commercial property and want to ensure the bill is in the correct name from the correct date.

2) You take over a space that isn’t clearly listed or has changed use.

3) You start using part of your home in a way that could create a separately rateable area (for example, converting a garage into a business-only workshop with customer visits).

So “registering” often means notifying the local council that you are the occupier of a non-domestic property (or a non-domestic part of a property), providing the start date of occupation, and ensuring the council can bill correctly. In some cases, the council may also liaise with the VOA if the rating list needs updating. If you ever receive a business rates bill, you don’t need to “register”; you need to verify it’s correct, check whether you qualify for relief, and pay or apply accordingly.

Does being a sole trader change anything?

Not in the way many people assume. Business rates liability is not based on whether you are a sole trader, partnership, limited company, or charity (though charities may qualify for particular reliefs). It’s mainly about occupation and use of a non-domestic property.

That said, sole traders often operate differently from larger organisations. They are more likely to work from home, use small flexible spaces, share premises, or start trading informally before committing to a lease. These patterns make it more common to be unsure about business rates, but they don’t exempt you automatically.

Where the sole trader status can matter indirectly is in eligibility for certain reliefs or discounts, especially when you occupy just one small property. For example, many small businesses (including sole traders) can benefit from small business rate relief, and the rules often look at how many properties you occupy and their rateable values. In practice, the smallest sole trader setups are the most likely to pay nothing because of relief—while still needing to understand the rules.

When do sole traders usually have to pay business rates?

Sole traders are most likely to pay business rates when they operate from a property that is clearly non-domestic. Typical examples include:

A shop, salon, café, or other customer-facing premises. If you rent or own a storefront or similar unit, it will usually be on the rating list and you will normally receive a business rates bill.

An office or studio space. Even a small office suite, an artist studio, or a photography studio can attract business rates. Some are within shared buildings where business rates are included in a service charge or rent, but you should not assume that without checking your agreement.

A workshop or industrial unit. Tradespeople sometimes rent small units to store tools, run light manufacturing, or prepare materials. These are typically rateable.

Storage or warehouse units. A self-storage unit used for business stock can sometimes lead to rate liability depending on the arrangement and whether the unit is separately assessed. Many common arrangements are already assessed as part of the storage provider’s property, but it varies.

Stables, yards, or other land used for business purposes. Some kinds of land use can be rateable, particularly if there are buildings or the land is used as part of a commercial operation.

In all these situations, the simplest way to think about it is: if you occupy a commercial space, you should expect business rates to be part of the cost picture. The main question becomes how much and whether any relief reduces it.

When do sole traders usually not need to worry about business rates?

Many sole traders won’t pay business rates at all, especially early on. Common scenarios include:

Working from home using a room as an office. If you use a spare bedroom as an office for admin, video calls, bookkeeping, and similar tasks, that typically does not create business rates liability on its own. Most people in this scenario continue paying normal council tax for the home, with no separate business rates charge.

Mobile or on-site work. If you’re a gardener, cleaner, personal trainer, tutor, or tradesperson who works at clients’ locations and doesn’t occupy a separate commercial property, business rates often don’t arise.

Online-only services with no dedicated business premises. Many freelancers run services online and keep equipment at home without a separate rateable space.

Using coworking spaces where you do not occupy a separately assessed unit. Hot-desking or using common areas in a coworking space often means you are not the ratepayer. The operator pays rates for the building, and costs are reflected in membership fees.

However, “usually not” isn’t the same as “never.” The details of how you use space can shift a home-based setup into something more likely to attract business rates.

Working from home: the most common sole trader situation

If you’re a sole trader working from home, your big question is whether any part of your home becomes a separately rateable business area. The answer depends on factors like exclusive business use, physical changes to the property, signage, customer visits, and the nature of the activity.

Exclusive business use vs mixed use

One of the most important concepts is whether a room or area is used exclusively for business. If a room is used only for business and not at all for domestic living, it can increase the chance that it might be treated differently for rating or council tax purposes. Many home-based sole traders keep their home “mixed use” by ensuring the space is also used domestically. For example, a desk in a spare room that sometimes doubles as a guest room or hobby space looks more like part of the home than a dedicated commercial unit.

That said, business rates don’t automatically appear just because you have exclusive business use of a room. Many home offices still don’t trigger separate rates. But exclusive use can be a factor that pushes the situation towards a separate assessment, especially if it’s more than just a laptop-and-desk arrangement.

Physical changes and business-only areas

Physical changes to your property can make a difference. For instance, converting a garage into a workshop with commercial equipment, separating it off from the home, and using it only for business can make it more likely to be treated as a non-domestic area. Similarly, if you build a detached studio in the garden that is fitted out as a business-only workspace, that can look more like a separate unit.

Again, the outcome isn’t guaranteed—each case depends on facts—but the more the space looks like business premises, the more likely business rates become part of the picture.

Customer visits and trading from home

If customers regularly visit your home—whether for appointments, classes, treatments, or picking up goods—the situation becomes more commercial. A therapist running sessions from a dedicated room, a hairdresser with a home salon, or someone selling goods from a front room that operates like a small shop are all scenarios where councils and valuers may take interest.

Occasional visits by appointment are different from a steady stream of customers and signage. Frequency, advertising of the premises as business location, and the extent of business activity can all be relevant.

Home-based retail and stock storage

Many sole traders run online shops and store stock at home. Stock storage alone doesn’t always trigger business rates, particularly if it’s within normal domestic spaces like cupboards, a spare room, or loft space. But if you turn a large part of the property into a stockroom, or you use an outbuilding purely for storage and dispatch with courier collections, the situation can start to resemble a commercial operation.

At that point, it’s sensible to consider whether your setup might be viewed as non-domestic in part, and whether you need advice. Even if business rates don’t apply, other issues like insurance, planning permissions, and lease restrictions (if you rent) can matter.

Renting a commercial property: what a sole trader should do

If you rent a shop, office, studio, or unit, you should assume business rates are relevant. Most commercial properties have a rateable value and sit on a rating list. The council usually bills the occupier. Here’s what you should do as a sole trader moving into such a space:

Check whether business rates are included in the rent. In most standard leases, rates are not included and you pay them separately to the council. In some serviced offices and managed spaces, the provider may include business rates in the package price. Don’t assume—ask and get it in writing.

Contact the council when you take occupation. If you don’t receive a bill promptly, it doesn’t mean you don’t owe anything. Councils can backdate bills once they’re aware. Letting them know your move-in date helps avoid confusion and can ensure relief is applied from the correct date.

Apply for relief immediately if you think you qualify. Relief isn’t always automatic. Many councils require a short application process for certain discounts, and it’s best to do this as soon as you’re liable so you don’t overpay or run into cashflow shocks.

Budget for rates even if you expect relief. Relief rules can change, eligibility can depend on details, and councils can request evidence. Treat relief as likely but not guaranteed until confirmed in writing.

Shared premises, coworking, and “who is the ratepayer?”

Many sole traders use flexible space: a desk in a coworking environment, a chair in a salon, a treatment room rented by the day, or a small studio within a larger building. In these setups, it’s not always obvious whether you have business rates liability.

The core idea is this: business rates are typically charged to whoever occupies the property (or part of it) as their premises. But in many flexible arrangements, you don’t occupy a separate unit in a way that the council bills you directly. Instead, the operator is the ratepayer and they recover the cost through membership fees or rent.

Examples where you likely are not billed directly include hot-desking memberships, casual room hire, and “rent a chair” models where the whole premises remains under one operator for rating purposes. Examples where you might be billed include situations where you have a separately demised unit (your own lockable office or studio) that is assessed separately, or where you take a lease of a distinct part of a building that is (or should be) separately listed.

The practical step is to look at your contract. If it looks like a licence to use space rather than a lease, and the price is all-inclusive, you might not deal with the council directly. If you have a lease and pay utilities and other outgoings separately, business rates are more likely to land with you. When in doubt, ask the provider and confirm how rates are handled.

Small business rate relief: why many sole traders pay nothing

A major reason many sole traders don’t end up paying business rates is small business rate relief. While the specifics can vary by nation within the UK and can be updated over time, the general principle is that properties with low rateable values often qualify for relief that reduces the bill, sometimes to zero.

In many cases, if you only occupy one property and it is small, you can get significant relief. This is particularly common for sole traders renting a tiny office, a small studio, or a modest retail unit in a low-demand area.

Relief can also apply in other ways, such as rural rate relief for certain village amenities, charitable relief (if applicable), transitional relief when valuations change, or discretionary relief schemes run by councils. Some reliefs require applications, and some have conditions that are easy to overlook, such as limits on occupying additional properties.

The takeaway is simple: even if you are liable for business rates, the amount you pay might be much less than you fear—and sometimes nothing at all. But you won’t know until you check the rateable value and confirm your eligibility.

How is the bill calculated?

A business rates bill is broadly calculated using:

Rateable value (RV): A valuation figure assigned to a property by the VOA, intended to represent the annual rental value on a set valuation date.

Multiplier: A figure set by government (often called the “uniform business rate”), which is multiplied by the RV to produce a baseline bill.

Reliefs and exemptions: Discounts applied to reduce the final amount.

As a sole trader, you don’t need to master every detail, but you should understand that the RV is a key driver and can be checked. If you think the RV is too high or the property details are wrong, there may be a process to challenge or request a review, though it can take time and requires evidence.

Do you need to “register” if you work from home?

In most straightforward home-working situations, there’s nothing to register for business rates. You simply continue paying council tax as usual, and your home remains a domestic property.

However, there are circumstances where it’s sensible to be proactive. If you’ve created a dedicated business-only area that could reasonably be considered non-domestic, or you’ve started receiving customers frequently and the home is functioning partly like commercial premises, it can be wise to contact your local council for guidance. This doesn’t automatically trigger a bill, but it helps you understand your position and avoid unpleasant surprises later.

Some sole traders avoid contacting anyone out of fear of “alerting the system,” but that approach can backfire. If the council later determines you have been liable for business rates, they can issue backdated bills. It’s far better to clarify early and plan properly, particularly if the sums involved might be significant.

Do you need to register if you rent a business premises?

If you take on a commercial unit, you should assume the council needs to know you are the occupier. Sometimes the landlord or letting agent informs them, but you should not rely on that. The sensible approach is:

1) As soon as you move in (or sign a start date), contact the council’s business rates team.

2) Provide your trading name, your own name, the property address, and the occupation start date.

3) Ask how to apply for any relevant relief, and what evidence they need.

If you don’t receive a bill, follow up. No bill does not necessarily mean no liability. It can simply mean an administrative delay.

What happens if you don’t tell the council?

If you occupy rateable premises and don’t inform the council, you may still be liable from the date you took occupation. Councils can issue bills later and backdate them. That can cause cashflow problems if you suddenly receive a demand for several months at once.

In addition, if you miss deadlines for applying for relief, you might lose out or face delays in getting discounts applied. Even where relief can be backdated, the process can be slower and more stressful than doing it upfront.

It’s also worth noting that business rates enforcement can be firm. Unpaid rates can lead to reminders, summons, and court processes. If you’re genuinely struggling, it’s better to contact the council early to discuss payment arrangements rather than ignoring correspondence.

Do some types of businesses have exemptions?

Yes, but it’s not as simple as “I’m a sole trader, therefore exempt.” Exemptions tend to be based on the type of property and how it’s used. Some categories of property may be exempt or have special treatment, and some reliefs are targeted at certain uses (for example, agricultural land and buildings often have particular rules, and charities can get relief on properties used for charitable purposes).

For most sole traders, the practical approach is to treat exemptions as something you verify rather than assume. If your premises are unusual—like a piece of land, a smallholding building, or a property used partly for community benefit—get advice from the council or a professional who understands rating.

Business rates vs council tax: can both apply to one property?

Sometimes, yes. Properties are generally either domestic (council tax) or non-domestic (business rates), but mixed-use situations exist. For example, if you live above a shop, the shop might pay business rates and the living accommodation might pay council tax. Similarly, if part of your home is assessed as non-domestic because it is used as a business-only area, it may be possible for that part to fall under business rates while the rest remains under council tax.

Mixed assessments can sound complicated, but the key point is that the system can split properties where there is a clear domestic area and a clear non-domestic area. This is more likely where there is a physically distinct area with separate access, signage, customer use, or specialist fittings.

Examples: common sole trader scenarios and what usually happens

Example 1: Freelance designer working from a laptop at home

You do client work online, run meetings by video call, and use a spare room as an office, but the room is also used for personal tasks. In this scenario, you would typically not have business rates liability. Your home stays under council tax only.

Example 2: Beauty therapist with a dedicated treatment room at home

You have a room set up for treatments, used only for clients, with regular appointments throughout the week. This may increase the chances that part of the home is treated as non-domestic. Whether business rates apply can depend on the nature and scale of use. Even if business rates apply, small business relief might reduce the bill significantly. You may also need to consider planning and insurance.

Example 3: Electrician renting a small lock-up unit for tools and materials

A small unit is likely to be rateable. You may be the ratepayer, and you should contact the council to ensure billing and relief are correct. If the rateable value is low, you might qualify for relief and pay little or nothing, but you still need to handle it properly.

Example 4: Online seller storing stock in a spare bedroom

Stock stored in a bedroom in a normal domestic way usually doesn’t create a separate business rates liability. If the operation grows and you convert an outbuilding into a business-only dispatch centre with daily courier collections, the situation could change.

Example 5: Photographer renting a studio space two days a week

If you hire a studio by the day within a larger rated property, you likely won’t be billed directly; the studio operator will. If you have a lease of a specific unit, you may receive a bill. Read your agreement and ask how rates are handled.

How to check whether a property has business rates

If you’re considering taking on premises, you can often check whether it has a rateable value and what that value is. Commercial landlords and agents may also provide this information. Knowing the RV lets you estimate the likely bill before relief.

If you already occupy a property and haven’t received a bill, you can contact the council’s business rates team with the address and ask whether it is listed and who is currently recorded as the ratepayer. This can prevent nasty surprises.

What to do if you receive a business rates bill as a sole trader

Getting a bill doesn’t automatically mean you must pay the full amount shown. The right approach is:

Check the details. Is your name correct? Is the property address correct? Is the start date of liability correct? If anything is wrong, contact the council immediately.

Check relief eligibility. Ask about small business rate relief and any other relevant reliefs. Some councils apply certain reliefs automatically, but do not assume that all are automatic.

Review the rateable value. If it seems unusually high compared with similar properties, investigate. You may be able to challenge it through the proper process, but don’t ignore the bill while doing so—ask the council what you should pay during a challenge.

Plan payments. Business rates are often paid in instalments. If cashflow is tight, communicate early to see what options exist.

What if you stop using the premises?

If you move out of a commercial property or stop using a separately rateable area, you should tell the council promptly and provide the vacation date. If you don’t, you might continue to be billed. Similarly, if you transfer occupation to another business or the landlord, make sure the dates are clear.

Some properties can qualify for empty property relief for a time, but the rules can be detailed. From a sole trader perspective, the main point is to communicate changes quickly and keep evidence of dates—like lease end dates, handover documents, or emails confirming the move-out.

Business rates and home-based sole traders: practical tips to stay on the safe side

Avoid making a room “business-only” unless you need to. If you can keep the space mixed use, it may reduce the chance of complications. This also helps with other issues like mortgage or tenancy conditions in some cases.

Be mindful of customer traffic. If your home becomes a destination for regular clients, it can change how the property is viewed. That doesn’t mean you must stop, but you should understand the possible tax and regulatory implications.

Keep records of how you use the space. If questions arise, having a clear explanation of your setup and use can help.

Don’t confuse business rates with your tax return. Business rates are not the same as income tax, National Insurance, or VAT. They are a property-based charge billed by the council, not calculated on your profits.

Is it ever a good idea to voluntarily pay business rates to look more “legit”?

It’s understandable to think that paying business rates might make your business look more established, especially when applying for certain contracts or funding. But business rates aren’t a badge of legitimacy; they’re a cost tied to premises. If you aren’t liable, you generally wouldn’t want to create unnecessary liability. If you are liable, you should handle it properly and apply for relief where eligible, rather than paying more than you need to.

Professional credibility can be demonstrated in many other ways: strong branding, clear contracts, insurance, compliance with licensing where relevant, and reliable delivery. Business rates should be treated as a practical property cost, not a status symbol.

Key takeaways for sole traders

If you’re a sole trader, you do not automatically need to register for business rates just because you are trading. Business rates are mainly about occupying non-domestic property. If you operate entirely from home with a typical home office setup, business rates are often not relevant. If you rent or own commercial premises—like a shop, office, studio, or unit—business rates are very likely relevant, although reliefs may reduce what you pay.

“Registering” usually means making sure the council knows you are the occupier and that any relief is applied from the correct date. If you receive a bill, take it seriously, check the details, and explore relief options. If you don’t receive a bill but you occupy commercial premises, don’t assume you’re in the clear—contact the council to avoid backdated surprises.

Most importantly, treat business rates as part of your premises planning. If you’re considering moving out of home and into a workspace, the headline rent is only one part of the cost. Understanding business rates early can help you choose the right space, price your services properly, and grow with fewer financial shocks.