When a business property sits empty, it can be a significant concern for the property owner. Not only does it mean a loss of potential income, but it can also result in additional costs in the form of business rates on unoccupied premises. These rates, also known as non-domestic rates, are taxes that are charged on most non-domestic properties, including commercial properties such as shops, offices, warehouses, and factories. In this article, we will explore what business rates on unoccupied premises are, how they are calculated, and what property owners can do to minimize their impact.
business rates on unoccupied premises are a form of tax that is charged by local authorities in England, Scotland, and Wales. The rates are based on the rateable value of the property, which is determined by the Valuation Office Agency (VOA) in England and Wales, and the Scottish Assessors in Scotland. The rateable value is an estimate of the open market rental value of a property at a particular date.
Property owners are required to pay business rates on unoccupied premises if their property remains empty for a certain period of time. In England and Wales, properties are exempt from business rates for the first three months that they are empty. After this initial period, full rates are payable. In Scotland, properties are exempt for the first six months, after which rates are payable in full.
The rateable value of a property is multiplied by a multiplier set by the government to calculate the amount of business rates payable. The multiplier is set annually and is different for England, Scotland, and Wales. In addition to the standard multiplier, there are also special rates for certain types of properties, such as empty properties and properties with a rateable value below a certain threshold.
Property owners may be eligible for exemptions or discounts on their business rates on unoccupied premises. For example, properties with a rateable value of less than £2,900 are exempt from business rates in England. In Scotland, properties with a rateable value of less than £15,000 are eligible for 100% relief, while properties with a rateable value of between £15,001 and £18,000 are eligible for taper relief.
Property owners can also apply for temporary relief if their property is undergoing repairs or structural alterations that prevent it from being used. In England and Wales, local authorities have the discretion to grant relief of up to 100% for a maximum of three months. In Scotland, temporary relief of up to 100% can be granted for a maximum of 12 months.
Property owners can take steps to minimize the impact of business rates on unoccupied premises. One option is to negotiate with the local authority to reduce the rateable value of the property. This can be done by providing evidence of lower rental values in the area or of physical changes to the property that affect its value.
Another option is to actively market the property for rent or sale. In England, properties that are actively being marketed for rent or sale are eligible for 50% relief on their business rates for up to 18 months. In Scotland, properties that are marketed for rent or sale are eligible for 100% relief for up to 12 months.
Property owners can also consider leasing the property to a charity or community amateur sports club (CASC). Properties that are occupied by registered charities or CASCs are eligible for 80% relief on their business rates. This can be a win-win situation, as the property owner benefits from reduced rates while the charity or CASC gains a space to operate.
In conclusion, business rates on unoccupied premises can be a significant burden for property owners. However, there are ways to minimize their impact, such as negotiating with the local authority, actively marketing the property, and leasing it to a charity or CASC. By understanding how business rates on unoccupied premises are calculated and exploring all available options for relief, property owners can better manage the costs of owning empty properties.