Empty properties can pose a significant financial burden on businesses, especially when it comes to business rates. In the UK, business rates are a tax that businesses have to pay on the non-domestic property they occupy, whether it is in use or empty. However, there are different rules and regulations surrounding business rates on empty property, which can sometimes be confusing and complex for business owners to navigate. In this article, we will delve into the intricacies of business rates on empty property, exploring the implications and potential challenges that businesses may face.
Business rates are a fundamental source of revenue for local authorities, helping to fund local services such as schools, road maintenance, and waste collection. The rates are based on the rateable value of a property, which is determined by the Valuation Office Agency (VOA). The rateable value reflects the open market rental value of a property on a particular date set by the VOA.
When a property becomes empty, business rates still need to be paid on it, unless it falls within certain exemptions. The first three months after a property becomes empty are exempt from business rates. After this initial three-month period, most commercial properties will be subject to full business rates, which can be a significant financial burden for businesses that are already struggling with the costs associated with an empty property.
There are, however, certain exemptions and reliefs available for empty properties that businesses should be aware of. For example, properties with a rateable value below a certain threshold may be eligible for small business rate relief, which can significantly reduce the amount of business rates that need to be paid. Additionally, properties that are undergoing renovation or structural repairs may be eligible for a temporary exemption from business rates.
Another important consideration for businesses with empty property is the impact of the government’s recent changes to business rates relief. In April 2017, the government introduced new regulations that removed the exemption for empty properties with a rateable value of less than £2,900. This change means that even small properties with low rateable values are now subject to business rates, which can have a substantial impact on businesses that own or lease such properties.
Business owners should also be aware of the implications of business rates on empty property when it comes to leasing or selling the property. Prospective tenants or buyers will often consider the cost of business rates when deciding whether to take on an empty property, which can make it more difficult for businesses to find tenants or buyers for their empty premises. In some cases, businesses may need to offer discounts or incentives to attract tenants or buyers, which can further eat into their profits.
One potential solution for businesses with empty property is to consider alternative uses for the property that may qualify for business rates relief. For example, certain types of community or charitable organizations may be eligible for mandatory relief on business rates, which can help to reduce the financial burden on businesses while also providing a valuable service to the local community. By exploring creative and innovative ways to use empty property, businesses may be able to offset the costs of business rates and generate additional income from their premises.
In conclusion, business rates on empty property can be a complex and challenging issue for businesses to navigate. With the financial implications of business rates, the changes to relief regulations, and the impact on leasing and selling property, it is essential for business owners to understand the rules and regulations surrounding business rates on empty property. By exploring potential exemptions, reliefs, and alternative uses for empty property, businesses can mitigate the financial burden of business rates and make the most of their empty premises.