Business rates on vacant property can be a confusing and often overlooked aspect of owning or leasing commercial space Many business owners may not be aware of the implications and costs associated with empty spaces In this article, we will delve deeper into the subject of business rates on vacant property, exploring what they are, how they are calculated, and what business owners can do to minimize their impact.
First and foremost, what are business rates? Business rates are taxes that are levied on non-residential properties by local authorities in the UK They are calculated based on the rateable value of the property, which is determined by the Valuation Office Agency (VOA) The rateable value is essentially an estimate of the annual rental value of the property at a specific point in time Business rates are used to fund local government services and infrastructure, such as schools, roads, and waste collection.
When a property is vacant, the owner is still liable to pay business rates This may come as a surprise to many business owners who assume that they are exempt from paying taxes on a property that is not generating any income However, the rationale behind this policy is that vacant properties still benefit from local services and infrastructure, regardless of whether they are occupied or not.
The amount of business rates payable on a vacant property is usually 100% of the normal rate, unless the property falls under certain exemptions or relief schemes For example, some properties that are undergoing refurbishment or redevelopment may be eligible for a temporary exemption from business rates Additionally, small business owners may qualify for small business rate relief, which can significantly reduce the amount of business rates payable.
It is important for business owners to be aware of the implications of leaving a property vacant for an extended period of time Not only are they still liable to pay business rates, but they may also be missing out on potential rental income or sales revenue business rates vacant property. Vacant properties can also attract vandalism, squatting, and other forms of property damage, which can further increase the costs associated with owning commercial space.
So, how are business rates on vacant property calculated? The rateable value of the property is multiplied by the national multiplier, which is set annually by the government The resulting figure is then adjusted for any transitional relief or other deductions that may apply If a property has been vacant for a certain period of time, additional penalties may also be imposed.
For business owners who are struggling to keep up with the costs of vacant property, there are a few options available to help reduce the financial burden One option is to appeal the rateable value of the property to the VOA If a business owner feels that the rateable value is too high, they can submit evidence to support their case and request a reassessment If the VOA determines that the rateable value should be lowered, this could result in a reduction in business rates payable.
Another option for business owners is to consider leasing out the property on a temporary basis By finding a short-term tenant, business owners can generate some income from the property and potentially qualify for empty property business rates relief This relief scheme provides a 100% discount on business rates for the first three months that a property is vacant, followed by a 50% discount for the remaining period.
In conclusion, business rates on vacant property are an important consideration for business owners who own or lease commercial space Understanding how business rates are calculated and the implications of leaving a property vacant can help business owners make informed decisions about their properties By exploring relief schemes, appealing rateable values, and considering temporary leasing options, business owners can take steps to minimize the financial impact of vacant property on their businesses.