Rent, Water Rates, General Rates & Premises Insurance: Codes 7100, 7102, 7103 & 7104

Wherever a business is based, occupying that space costs money in more ways than one — rent to the landlord, rates to the local authority, water charges, and insurance to protect the building and its contents.

The codes, and what each one holds

Code 7100 — Rent records rent paid for business premises leased rather than owned.

Code 7102 — Water Rates covers water and sewerage charges for the premises.

Code 7103 — General Rates covers business rates charged by the local council.

Code 7104 — Premises Insurance covers buildings and contents insurance for the premises. All four are Overheads codes and normally carry a debit balance.

Real-world examples across industries

Small independent shop

A small shop's landlord hasn't opted to tax the property, so quarterly rent of £4,500 stays VAT-exempt: a debit of £4,500 to 7100 (Rent) and a credit of £4,500 to 2100 (Creditors Control Account), with nothing posted to 2201. The shop's low rateable value qualifies it for Small Business Rates Relief, reducing its quarterly bill to £180 — a debit of £180 to 7103 (General Rates) and a credit of £180 to 2100, again with no VAT since business rates are a statutory tax rather than a supply. Its water bill for ordinary washroom use is zero-rated as non-industrial: a debit of £96 to 7102 (Water Rates) and a credit of £96 to 2100. Premises insurance for a low fire-risk unit like this comes to £900 a year, exempt from VAT: a debit of £900 to 7104 (Premises Insurance) and a credit of £900 to 2100.

Restaurant with a commercial kitchen

This restaurant's landlord has opted to tax the unit, so quarterly rent of £6,600 (£5,500 net) carries VAT: a debit of £5,500 to 7100, a debit of £1,100 to 2201 (Purchase Tax Control Account), and a credit of £6,600 to 2100. Water for a commercial kitchen and washrooms is generally treated as non-industrial use under HMRC's classification, so a £360 quarterly bill stays zero-rated: a debit of £360 to 7102 and a credit of £360 to 2100 — worth confirming against the supplier's own coding, since the industrial/non-industrial split is drawn from HMRC's specific trade classifications rather than usage volume. The real outlier here is premises insurance — hot cooking oil, extraction systems and heavy kitchen equipment push the annual premium to £3,200, roughly three times an office of similar size, still exempt from VAT: a debit of £3,200 to 7104 and a credit of £3,200 to 2100.

Manufacturing or warehouse unit

A manufacturer leasing a large industrial unit has a far higher rateable value than a small shop and doesn't qualify for small business relief — a quarterly rates bill of £4,800 is a debit of £4,800 to 7103 and a credit of £4,800 to 2100, still with no VAT. Because the water here is used directly in the production process rather than just washrooms and kitchens, it falls under HMRC's definition of industrial use and is standard-rated at 20%: a £2,400 bill (£2,000 net) is a debit of £2,000 to 7102, a debit of £400 to 2201, and a credit of £2,400 to 2100 — a materially different VAT treatment from the shop and restaurant above, driven entirely by how the water's used rather than the trade itself. Rent on the unit, £9,000 a quarter, is VAT-exempt because this landlord hasn't opted to tax: a debit of £9,000 to 7100 and a credit of £9,000 to 2100.

Why this matters day to day

Splitting occupancy costs across these codes makes it easy to see the true total cost of running a location, which matters when comparing premises or negotiating a lease renewal. It also flags quickly if one element — say business rates after a revaluation — has jumped unexpectedly, rather than that increase getting lost inside a single "premises costs" figure.