When it comes to owning a commercial property, there are many factors that can impact your bottom line. One of the most significant costs for property owners is business rates – the tax that businesses have to pay on their non-residential properties. While it is a necessary expense to contribute to the local economy, there are certain circumstances where property owners may find themselves in a tricky situation – paying business rates on vacant property.
business rates on vacant property can be a significant burden for property owners, especially when they are not generating any income from the property. Many property owners are often confused about the rules and regulations surrounding business rates on vacant property, which can lead to unexpected costs and financial strain. In this article, we will explore the ins and outs of business rates on vacant property and provide guidance on how property owners can navigate this complex issue.
Business rates are calculated based on the rateable value of a property, which is determined by the Valuation Office Agency (VOA). The rateable value is an estimate of the open market rental value of the property on a specific date set by the VOA. Property owners are required to pay business rates annually to the local authority, which uses the revenue to fund local services such as schools, roads, and infrastructure.
When a property becomes vacant, the responsibility for paying business rates falls on the property owner. This is where many property owners may find themselves in a difficult situation, as they are faced with the challenge of paying business rates on a property that is not generating any income. However, there are certain exemptions and relief schemes available that property owners can take advantage of to reduce their business rates liability on vacant property.
One of the most common exemptions for business rates on vacant property is the three-month empty property relief. This relief allows property owners to receive a full exemption from business rates for the first three months that a property is vacant. After the initial three-month period, property owners are required to pay full business rates unless they qualify for other relief schemes.
Another relief scheme that property owners can apply for is the extended empty property relief. This relief provides an additional three months of exemption from business rates for certain types of properties, such as industrial properties or those in an enterprise zone. Additionally, property owners who are carrying out repairs or renovations on their vacant property may be eligible for the property improvement relief, which can provide a temporary reduction in business rates.
It is important for property owners to be aware of the eligibility criteria and application process for these relief schemes to ensure that they are not overpaying on business rates for their vacant property. Seeking professional advice from a chartered surveyor or property consultant can help property owners navigate the complexities of business rates and identify opportunities for savings.
In some cases, property owners may consider demolishing or redeveloping their vacant property to reduce their business rates liability. By obtaining planning permission for a new development or securing a change of use for the property, property owners may be able to qualify for exemptions or relief schemes that can help offset the cost of business rates.
Property owners should also be mindful of the implications of leaving a property vacant for an extended period. Local authorities have the power to levy additional charges on properties that have been empty for a specified period, known as the empty property premium. The premium is typically set at a higher rate than standard business rates and can significantly increase the costs for property owners.
In conclusion, business rates on vacant property can be a significant financial burden for property owners, but there are options available to reduce these costs. By exploring relief schemes, seeking professional advice, and considering redevelopment opportunities, property owners can navigate the complexities of business rates and protect their bottom line. It is essential for property owners to stay informed about the rules and regulations surrounding business rates to avoid unexpected costs and financial strain.