When a business owner decides to temporarily vacate their property for renovations, relocation, or any other reason, they may not realize that they are still liable to pay unoccupied business rates. These rates, also known as empty property rates, are taxes imposed on commercial properties that are not being used.
The rationale behind unoccupied business rates is to discourage property owners from leaving their buildings vacant for extended periods of time. Since empty properties can have a negative impact on the local community and economy, the government uses these rates as a way to incentivize owners to keep their buildings in use.
It’s important for business owners to understand how unoccupied business rates work and how they can avoid unnecessary costs. In this article, we’ll delve into the specifics of unoccupied business rates and offer some useful tips for managing them.
How are unoccupied business rates Calculated?
Unoccupied business rates are calculated based on the rateable value of the property. The rateable value is an estimate of the property’s open market rental value as determined by the Valuation Office Agency (VOA). The actual rate payable can vary depending on the local authority and the specific circumstances of the property.
In most cases, unoccupied business rates are charged at 100% of the normal business rates for the first three months that a property is empty. After the initial three-month period, the rates can increase to 200% of the normal rate if the property remains unoccupied. This steep increase is designed to encourage property owners to either occupy their buildings or find alternative uses for them.
Exemptions and Relief
While unoccupied business rates are generally unavoidable, there are some exemptions and reliefs that business owners can take advantage of to reduce their liability. These exemptions include:
– Properties with a rateable value of £2,900 or less are exempt from unoccupied business rates.
– Properties that are unoccupied for less than three months are not subject to the increased rates.
– Buildings undergoing major structural repairs or alterations may be eligible for a temporary exemption.
– Listed buildings and buildings with special historical or architectural significance may qualify for relief.
– Charities and community amateur sports clubs are eligible for 80% relief on unoccupied property rates.
It’s important for business owners to check with their local authority to see if they qualify for any exemptions or relief programs. Failing to apply for these benefits could result in unnecessary financial burdens.
Tips for Managing unoccupied business rates
For business owners who find themselves facing unoccupied business rates, there are several strategies they can use to manage the situation effectively:
– Consider renting out the property on a short-term basis to generate income and avoid empty property rates.
– Use the property for storage or other temporary purposes to demonstrate that it is still in use.
– Keep the property well-maintained to attract potential tenants and reduce the risk of vandalism or disrepair.
– Explore the possibility of appealing the rateable value of the property with the VOA to lower the unoccupied business rates.
– Stay informed about changes to unoccupied business rates legislation and seek professional advice if needed.
By taking proactive steps to manage unoccupied business rates, business owners can minimize their financial burden and ensure that their properties remain in productive use.
In conclusion, unoccupied business rates can be a significant expense for property owners, but with careful planning and proactive management, they can be effectively managed. By understanding how these rates are calculated, exploring exemptions and relief programs, and implementing practical strategies, business owners can navigate the challenges of unoccupied property and mitigate their financial impact. Ultimately, staying informed and proactive is key to successfully managing unoccupied business rates and preserving the value of commercial properties.