General Rates

This Overheads code records the cost of general rates incurred in running the business. As an expense account, it normally carries a debit balance: debit entries increase the balance (recording new costs) and credit entries decrease it (for example, correcting an error or a refund received).

Real-world examples

Small retail unit — rates relief

A small shop with a low rateable value can qualify for Small Business Rates Relief, which can reduce or even eliminate the rates bill entirely depending on the property's rateable value and the local authority's scheme. Where rates are still due, a £340 quarterly bill from the local council is a debit of £340 to 7103 (General Rates) and a credit of £340 to 2100 (Creditors Control Account) or 1200 (Bank Current Account) — business rates are a statutory local tax rather than a supply of goods or services, so no VAT applies and there's never a 2201 line here.

Large warehouse or industrial unit

A large warehouse or industrial unit has a far higher rateable value and doesn't qualify for small business relief, so the rates bill is a much bigger fixed cost relative to the size of the business occupying it — a £4,800 quarterly bill posted the same way, a debit of £4,800 to 7103 and a credit of £4,800 to 2100. Because rates are set by rateable value rather than turnover or headcount, this cost doesn't flex with trading performance the way most overheads eventually do.

Commonly confused with

Because code 7102 (Water Rates) sits right next to this one in Overheads, it's a common mis-posting target. Code 7103 is specifically for general rates, while 7102 covers water rates — similar in nature, but keeping them separate is what makes the overheads section of your management accounts meaningful rather than a single lumped total.

What a mis-posting here costs you

An error posting to General Rates won't change total overhead spend, but it will distort the overheads breakdown that's usually reviewed line by line each month to spot cost creep.

Other codes in Overheads