Investing in commercial properties can be a lucrative way to generate passive income and build wealth over time. However, one of the major drawbacks of owning commercial property is the obligation to pay business rates, even if the property sits vacant. Business rates are taxes levied on non-residential properties in the UK, and they can add up quickly, eating into your profits. However, there are ways to minimize or even avoid paying business rates on empty properties. In this article, we will explore some strategies that property owners can use to legally reduce their business rates bill and maximize their investment returns.
One of the most common ways to avoid paying business rates on empty property is by claiming an exemption. In England, properties that have been empty for three months or less are exempt from business rates. This exemption period is extended to six months for industrial properties and a year for listed buildings. By keeping your property vacant for less than the exempt period, you can avoid paying business rates altogether.
Another strategy for minimizing business rates on empty property is by applying for the “small business rate relief.” This relief is available for properties with a rateable value of less than £15,000 and can significantly reduce the amount of business rates that you are required to pay. By taking advantage of this relief, you can save money on your business rates bill and increase your overall property investment returns.
Additionally, property owners can consider appealing the rateable value of their property to reduce their business rates bill. The rateable value is used to calculate the amount of business rates that a property owner is required to pay, so by lowering the rateable value, you can lower your business rates bill. Property owners can hire a professional rating surveyor to assess the rateable value of their property and file an appeal with the Valuation Office Agency if they believe that the current rateable value is inaccurate or inflated.
Another effective strategy for avoiding business rates on empty property is by exploring temporary use options. Instead of leaving your property vacant, consider renting it out on a short-term basis to pop-up shops, artists, or other temporary tenants. By temporarily occupying the property, you can qualify for business rates relief under the “occupation which is prohibited by law” exemption. This exemption applies to properties that are prohibited by law from being occupied, such as properties undergoing renovation or redevelopment. By utilizing this exemption, you can avoid paying business rates on your empty property while generating rental income from temporary tenants.
Property owners can also consider redeveloping their empty property to qualify for business rates relief. Properties that are undergoing substantial structural alterations or are in the process of being demolished are eligible for exemption from business rates. By investing in the redevelopment of your property, you can not only increase its value and attractiveness to potential tenants but also avoid paying business rates on it while the redevelopment is ongoing. This can be a win-win situation for property owners looking to minimize their business rates bill and maximize their investment returns.
In conclusion, there are several strategies that property owners can use to legally minimize or avoid paying business rates on empty property. By taking advantage of exemptions, relief schemes, rateable value appeals, temporary use options, and redevelopment opportunities, property owners can reduce their business rates bill and increase their overall investment returns. Whether you are a seasoned property investor or a first-time commercial property owner, it is important to be aware of the options available to you for avoiding business rates on empty property. By implementing these strategies, you can make the most of your investment and maximize your returns in the competitive commercial property market.