business rates on unoccupied premises, also known as empty property rates, are a form of tax levied on commercial properties that are not being used. The purpose of these rates is to encourage property owners to put their vacant buildings to productive use and prevent properties from sitting empty for extended periods of time.
Business rates are typically charged on most non-domestic properties, including shops, offices, warehouses, and factories. However, when a property becomes empty, the responsibility for paying the business rates falls on the property owner rather than the tenant. This can often lead to financial strain for property owners, especially during periods when finding a new tenant may be difficult.
One common misconception about business rates on unoccupied premises is that they are not applicable for a certain period of time. While it is true that some properties may be exempt from paying business rates for a short initial period after becoming empty, such as three months for industrial properties and six months for offices and shops, these exemptions are only temporary. After the initial exemption period expires, the property owner is liable to pay the full business rates on the unoccupied premises.
The rateable value of a property, which is used to calculate the business rates payable, is determined by the Valuation Office Agency (VOA). The rateable value represents the yearly rental value of the property if it were let on the open market. It is important for property owners to keep the VOA informed of any changes to the property, such as renovations or improvements, as this can affect the rateable value and therefore the business rates payable.
There are some strategies that property owners can consider to reduce the impact of business rates on unoccupied premises. One option is to apply for an exemption or relief from paying the rates. For example, if a property is undergoing major repair works or structural alterations, the property owner may be able to claim a 100% exemption from paying business rates for a set period of time. This can provide temporary relief while the property is being brought back into use.
Another option is to explore the possibility of leasing the property out on a short-term basis to a charity or community group. Properties that are used for charitable purposes are eligible for an 80% discount on business rates, which can significantly reduce the financial burden on the property owner. This not only benefits the property owner by lowering their costs but also provides a valuable resource for the community.
Property owners can also consider appealing the rateable value of their property if they believe it has been set too high. This can be done through the Valuation Office Agency or an independent surveyor. By providing evidence of comparable rental values in the area or demonstrating any unique features or restrictions that may affect the property’s rental potential, property owners may be able to secure a reduction in their rateable value and therefore their business rates.
It is important for property owners to be aware of their obligations regarding business rates on unoccupied premises and to seek professional advice if needed. Failure to pay the rates can result in penalties and legal action by the local council. By taking proactive steps to manage their business rates liabilities, property owners can minimize the financial impact of having vacant properties and potentially attract new tenants more quickly.
In conclusion, business rates on unoccupied premises can be a significant financial burden for property owners, especially during times of economic uncertainty. Understanding the rules and regulations surrounding business rates, exploring options for exemptions or reliefs, and considering strategies to reduce the impact of the rates can help property owners navigate this complex aspect of property ownership. By staying informed and seeking professional advice when needed, property owners can effectively manage their business rates liabilities and ensure their properties remain profitable in the long term.