When it comes to owning commercial property, one of the most important factors to consider is the business rates that you will have to pay In some cases, these rates can be even more burdensome when the property is vacant Understanding how business rates apply to vacant property is crucial for property owners looking to minimize their financial obligations In this article, we will delve into what business rates are, how they apply to vacant property, and what steps you can take to manage them effectively.
What are Business Rates?
Business rates are a tax on non-domestic properties in the United Kingdom They are based on the rateable value of the property, which is determined by the Valuation Office Agency (VOA) The local council uses this rateable value to calculate how much a property owner must pay in business rates each year These rates help fund local services such as schools, roads, and waste management.
Business rates are a significant expense for property owners, especially those who own commercial properties However, there are certain exemptions and reliefs available that can help reduce the amount of business rates owed One such exemption applies to vacant property.
Business Rates on Vacant Property
When a commercial property becomes vacant, the owner is still required to pay business rates This can be a significant financial burden, especially for property owners who are struggling to find tenants or buyers for their property In some cases, property owners may be reluctant to declare their property vacant to avoid paying business rates However, failing to do so can result in hefty fines and legal consequences.
In the past, property owners were given a 100% exemption on business rates for the first three months that their property was vacant However, in April 2017, the government introduced changes to the system Now, property owners are only entitled to a 100% exemption for the first three months if the property has been occupied for at least six weeks in the previous year business rates vacant property. This change was implemented to prevent property owners from claiming exemptions on long-term vacant properties.
After the initial three-month exemption period, property owners are required to pay 50% of the standard business rates on their vacant property This rate can vary depending on the specific circumstances of the property and its location Property owners must continue to pay this reduced rate until the property is either reoccupied or the empty property relief period ends.
Managing Business Rates on Vacant Property
There are several strategies that property owners can employ to manage their business rates on vacant property effectively One option is to explore the various reliefs and exemptions available For example, if a property is undergoing renovation or reconstruction, the owner may be eligible for a temporary exemption from business rates Additionally, certain types of properties, such as agricultural land and buildings used for charities, may be entitled to specific reliefs.
Property owners can also consider appealing the rateable value of their property if they believe it has been overvalued The appeal process involves submitting evidence to the VOA to support the claim that the rateable value is incorrect If successful, the rateable value will be adjusted, resulting in lower business rates.
Another option for property owners is to consider leasing out the vacant property on a short-term basis By renting the property out, even for a short period, the owner may become eligible for business rates relief This can help offset some of the financial burden of paying business rates on a vacant property.
In conclusion, understanding how business rates apply to vacant property is crucial for property owners looking to manage their financial responsibilities effectively While paying business rates on vacant property can be a significant expense, there are strategies that owners can employ to minimize their obligations By exploring exemptions, reliefs, and other options, property owners can navigate the complexities of business rates on vacant property and ensure that they are not paying more than necessary.