When it comes to running a business, there are countless factors that can impact your bottom line. From rent and utilities to taxes and payroll, the costs of operating a business can quickly add up. One often-overlooked expense that can catch business owners off guard is business rates on empty property.
Empty property, whether it be a storefront, office space, or industrial building, is subject to business rates by local authorities in the UK. These rates are a tax that must be paid by the owner of the property, regardless of whether the property is being used for business purposes or not. Understanding how these rates are calculated and what options are available for reducing or avoiding them is essential for any business owner with vacant property.
business rates on empty property are based on the rateable value of the property, which is determined by the Valuation Office Agency (VOA). The rateable value is an estimate of the property’s rental value on the open market at a specific date. The VOA reassesses rateable values every five years to ensure they are accurate and reflective of current market conditions.
Once the rateable value of a property is determined, it is multiplied by the national non-domestic multiplier, also known as the business rates multiplier, to calculate the amount of business rates owed. The multiplier is set annually by the government and is the same nationwide.
For properties that have been empty for three months or more, the property owner is required to pay 100% of the business rates owed. This can be a significant financial burden for businesses that are struggling or may be in the process of finding a new tenant or buyer for their property. However, there are options available for reducing or avoiding business rates on empty property.
One option for reducing business rates on empty property is to apply for an exemption or relief. Properties that are unoccupied for a short period due to structural repairs or improvements may qualify for relief from business rates. Additionally, properties that are listed buildings, agricultural buildings, or small business premises may be eligible for exemptions or discounts on their business rates.
Another option for reducing business rates on empty property is to take advantage of the Empty Property Rate Relief scheme. This scheme allows property owners to receive a 100% discount on their business rates for the first three months that the property is empty. After the initial three-month period, the property owner is required to pay 100% of the business rates owed, unless they qualify for additional exemptions or reliefs.
For properties that have been empty for more than two years, the business rates multiplier is increased to 1.3 times the standard rate. This penalty is intended to encourage property owners to bring their empty properties back into use and help alleviate the shortage of available commercial space in the UK.
Navigating the complicated world of business rates on empty property can be challenging for business owners, especially those who are unfamiliar with the intricacies of the UK tax system. Seeking guidance from a professional tax advisor or chartered surveyor can help property owners understand their obligations and explore their options for reducing or avoiding business rates on empty property.
In conclusion, business rates on empty property are an important consideration for any business owner with vacant commercial space. Understanding how these rates are calculated and what options are available for reducing or avoiding them is crucial for managing the financial impact of owning empty property. By exploring exemptions, reliefs, and other options, property owners can minimize their tax liabilities and make informed decisions about their real estate investments.