Business rates on vacant property can be a significant concern for property owners and investors These rates apply to commercial properties that are unoccupied, and they can have a major impact on the financial performance of a property investment In this article, we will explore what business rates on vacant property are, how they are calculated, and some of the exemptions and reliefs that may be available.
Business rates, also known as non-domestic rates, are taxes levied on most non-residential properties in the UK These rates are an important source of revenue for local authorities, helping to fund essential services such as schools, roads, and waste collection Business rates are based on the rateable value of a property, which is an estimate of its rental value as determined by the Valuation Office Agency (VOA) The rateable value is then multiplied by the business rates multiplier, which is set annually by the government, to calculate the amount of rates payable.
When a commercial property becomes vacant, the owner is still liable to pay business rates on the property This can be a significant financial burden, particularly if the property remains unoccupied for an extended period of time However, there are some exemptions and reliefs available that may help to reduce the amount of rates payable on vacant property.
One potential exemption is the empty property rate relief, which provides a 100% discount on business rates for the first three months that a property is unoccupied After the initial three-month period, the rate of relief may be reduced to 50%, depending on the property’s rateable value It is important to note that empty property rate relief is only available for a limited period, so property owners may need to consider alternative strategies for reducing their business rates liability in the long term.
Another option for reducing business rates on vacant property is the small business rate relief scheme This scheme provides a discount on business rates for properties with a rateable value below a certain threshold, which varies depending on the location of the property business rates vacant property. Property owners may be eligible for small business rate relief even if their property is vacant, as long as they meet the criteria for the scheme.
In addition to these reliefs, there are also certain exemptions available that may apply to specific types of property For example, properties that are undergoing major renovation or structural repairs may be eligible for an exemption from business rates for a limited period Property owners should check with their local authority to determine whether any exemptions or reliefs apply to their vacant property.
It is worth noting that the government has made some changes to business rates on vacant property in recent years In 2017, the government introduced new legislation that removed the automatic exemption for vacant properties with a rateable value below £2,900 This means that all commercial properties, regardless of their rateable value, are now liable to pay business rates if they are unoccupied.
This change has had a significant impact on property owners, particularly those with smaller properties that were previously exempt from business rates Property owners may need to reassess their financial projections and budgets to account for the additional cost of business rates on vacant property In some cases, property owners may need to consider selling or leasing their vacant property to avoid the financial burden of business rates.
In conclusion, business rates on vacant property can be a complex and costly issue for property owners and investors However, there are exemptions and reliefs available that may help to reduce the amount of rates payable on vacant property Property owners should carefully consider their options and seek advice from a qualified professional to determine the best course of action for managing their business rates liability on vacant property.