When it comes to owning commercial property, one of the many factors that business owners need to consider is the issue of business rates on empty commercial property. Business rates are a tax that is charged on most non-domestic properties, including shops, offices, warehouses, and factories. However, the rules around business rates on empty commercial property can be complex and confusing for many business owners. In this article, we will explore what business rates are, how they are calculated, and what business owners can do to mitigate the financial impact of empty commercial properties.
Business rates are a tax that is charged by local councils in England, Scotland, and Wales on most non-domestic properties. The revenue generated from business rates is used to fund local services such as schools, roads, and police. The amount of business rates that a property owner has to pay is calculated based on the rateable value of the property, which is determined by the Valuation Office Agency. The rateable value is an estimate of the open market rental value of the property at a specific date, usually set by the local council every five years.
One of the main concerns for business owners is the issue of business rates on empty commercial property. In the past, business owners were given a 100% exemption from paying business rates on a property that had been empty for a certain period of time. However, this changed in 2008 when the government introduced a new policy that required business owners to pay 100% of the business rates on empty commercial property after three months for retail properties and six months for all other properties. This change was introduced to encourage property owners to bring empty properties back into use and prevent them from sitting vacant for extended periods.
The introduction of this policy has had a significant impact on many business owners, especially those who own multiple properties or are struggling financially. Paying business rates on empty commercial property can be a considerable financial burden, especially if the property has been empty for an extended period. In some cases, business owners have found themselves paying thousands of pounds in business rates on properties that are not generating any income.
So, what can business owners do to mitigate the financial impact of empty commercial properties? There are several options available to property owners who are struggling to pay business rates on empty commercial property. One option is to apply for an exemption or relief from paying business rates on empty properties. For example, business owners may be eligible for an exemption if the property is in an area that has been affected by major works, such as road closures or construction projects. Additionally, business owners may be able to claim relief if the property is undergoing repairs or renovations.
Another option for business owners is to consider renting out the empty property on a short-term basis. By doing so, business owners can generate some income from the property and reduce the financial burden of paying business rates. This option is particularly beneficial for property owners who are struggling to find long-term tenants or are waiting for the right opportunity to sell or develop the property.
Alternatively, property owners can also consider negotiating with the local council to reduce the business rates on empty commercial property. In some cases, councils may be willing to offer a discount or payment plan to property owners who are facing financial difficulties. It is essential for property owners to communicate openly and honestly with the council about their situation and provide evidence to support their case.
In conclusion, business rates on empty commercial property can be a significant financial burden for many business owners. The change in policy in 2008 has made it more challenging for property owners to avoid paying business rates on empty properties. However, there are options available for business owners to mitigate the financial impact, such as applying for exemptions or reliefs, renting out the property, or negotiating with the local council. By exploring these options, business owners can better navigate the complexities of business rates on empty commercial property and alleviate some of the financial stress associated with owning vacant properties.