Business rates are the taxes that businesses in the UK must pay on the commercial property they occupy. However, what happens when a property sits empty? Many property owners are shocked to find out that they are still required to pay business rates on an empty property, even if it is generating no income. In this article, we will explore the implications of business rates on empty property and provide some insights into how property owners can navigate this often frustrating aspect of property ownership.
When a property is not in use, either because it is vacant or being refurbished, property owners are still required to pay business rates. This can be a significant financial burden for owners who are already experiencing a loss of income from the property. The rationale behind business rates on empty property is to discourage property owners from leaving properties vacant for prolonged periods of time. By imposing this tax, the government aims to incentivize property owners to put their properties back into use, which in turn benefits the local economy.
The business rates on empty property are calculated based on the rateable value of the property. The rateable value is determined by the Valuation Office Agency (VOA), and it represents the rental value of the property at a set date. Property owners can check the rateable value of their property on the VOA website and use this information to calculate how much they will need to pay in business rates.
There are some exemptions and reliefs available for business rates on empty property. For example, properties with a rateable value of less than £2,900 are exempt from business rates altogether. Additionally, properties that are empty for a short period of time due to repairs or refurbishments may qualify for a 100% relief for the first three months that the property is empty. After this initial period, the property owner will be required to pay the full amount of business rates.
It is important for property owners to be aware of these exemptions and reliefs and to apply for them if they think they may be eligible. Failure to do so could result in unnecessary financial strain on the property owner. Property owners can also seek advice from a property tax specialist to help them navigate the complex world of business rates on empty property.
One strategy that property owners can use to mitigate the impact of business rates on empty property is to consider leasing the property to a charity or community interest company. Properties that are leased to these types of organizations are eligible for an 80% discount on business rates. This can be a win-win situation for both the property owner and the organization leasing the property, as the property owner can reduce their tax burden while the organization benefits from a discounted rental rate.
Another option for property owners facing business rates on empty property is to appeal the rateable value of the property. If a property owner believes that the rateable value is inaccurate or unfair, they can submit an appeal to the VOA. It is important to provide evidence to support the appeal, such as rental comparables or details of any unique features of the property that may affect its value. While the appeals process can be lengthy and complex, it can result in a lower rateable value and therefore a lower tax liability for the property owner.
In conclusion, business rates on empty property can be a significant financial burden for property owners, but there are ways to navigate this challenge. By understanding the exemptions and reliefs available, seeking advice from a property tax specialist, and exploring alternative leasing options, property owners can reduce their tax liability and make the best of a challenging situation. It is important for property owners to stay informed and proactive in managing their business rates on empty property to avoid unnecessary financial strain.