business rates vacant property, otherwise known as empty property rates, can be a significant cost for businesses that own or lease property. These rates are charged on commercial properties that are empty for a certain period of time, and understanding how they are calculated and what exemptions are available is essential for property owners and tenants.
Business rates in the UK are a tax on non-domestic properties that help fund local services such as schools, roads, and police. The rates are based on the rental value of the property, and if a property is empty, the responsibility for paying these rates falls on the owner or tenant.
When a commercial property becomes vacant, the owner or tenant must notify the local council. The council will then notify the Valuation Office Agency (VOA), which will assess the rateable value of the property. The rateable value is used to calculate the business rates that are due on the property.
The rateable value of a property is based on its open market rental value as of a certain date. The VOA uses rental evidence, such as lease agreements and rental transactions, to determine the rateable value of a property. Once the rateable value is determined, it is multiplied by the appropriate multiplier set by the government to calculate the business rates that are due.
For vacant properties, the rateable value is based on the hypothetical rental value of the property if it were occupied. This means that even if a property is vacant, business rates will still be charged on it. The rates for vacant properties are typically 50% of the normal business rates for the first three months and 100% thereafter.
However, there are exemptions and reliefs available for certain types of vacant properties. For example, properties with a rateable value of less than £2,600 are exempt from paying business rates on them. Additionally, properties that are empty for industrial or warehouse use may qualify for a 100% exemption for the first six months.
Property owners and tenants should be aware of these exemptions and reliefs to minimize their business rates liability on vacant properties. It is also important to keep the local council informed of any changes in the occupancy status of a property to ensure that the correct rates are being charged.
There are also ways in which property owners can reduce their liability for business rates on vacant properties. One option is to negotiate a temporary agreement with the local council to defer or reduce the rates while the property is vacant. This can be especially helpful for properties that are temporarily vacant due to refurbishment or redevelopment.
Another option is to consider leasing the property to a charity or community interest group. Properties that are used for charitable purposes are eligible for an 80% mandatory relief on business rates. By leasing the property to a qualifying organization, property owners can significantly reduce their liability for business rates on vacant properties.
Property owners may also consider exploring other ways to generate income from vacant properties, such as renting out space for storage or hosting temporary events. By generating income from a vacant property, property owners can offset the cost of business rates and potentially turn a profit.
In summary, business rates on vacant properties can be a significant cost for property owners and tenants. Understanding how these rates are calculated, what exemptions are available, and how to reduce liability can help minimize the financial impact of vacant properties on businesses. By staying informed and exploring all available options, property owners can effectively manage their business rates liability on vacant properties.