Business rates can be a significant financial burden for property owners, especially when a property sits empty. In the UK, businesses are required to pay business rates on most non-domestic properties, including shops, offices, and warehouses. However, there are several strategies that property owners can use to legally avoid or minimize business rates on empty property.
One common strategy for avoiding business rates on empty property is to claim Small Business Rate Relief. This relief is available to businesses that only occupy one property and have a rateable value below a certain threshold. Property owners can claim this relief even if their property is empty, as long as they meet the eligibility criteria. By claiming Small Business Rate Relief, property owners can reduce the amount of business rates they are required to pay on their empty property.
Another strategy for avoiding business rates on empty property is to apply for Empty Property Rate Relief. This relief is available to property owners whose properties have been empty for a certain period of time. In England, for example, properties are eligible for Empty Property Rate Relief for the first three months they are empty. After this initial period, property owners can apply for a further three months of relief, but they must demonstrate that they are actively trying to re-let or sell the property.
Property owners can also avoid business rates on empty property by using the “material change in circumstances” loophole. This loophole allows property owners to temporarily avoid business rates if their property undergoes a significant change that makes it unoccupiable. For example, if a property is damaged in a fire or flood and cannot be used for its intended purpose, the owner may be able to claim relief on the basis of a material change in circumstances. However, property owners must be prepared to provide evidence to support their claim, such as photographs or reports from surveyors.
One creative strategy for avoiding business rates on empty property is to temporarily convert the property into a pop-up shop or art gallery. By leasing the property to a temporary tenant for a short period of time, property owners can take advantage of the Empty Property Rate Relief that is available for properties that are being used for certain purposes. This strategy not only helps property owners avoid business rates on their empty property but also generates income while they are waiting for a long-term tenant.
Property owners can also consider demolishing their empty property as a strategy for avoiding business rates. If a property is in poor condition or is no longer economically viable, owners may choose to demolish the building and redevelop the site. Empty properties that are undergoing redevelopment are eligible for relief from business rates, as long as the property owner can demonstrate that they have a clear plan for the site and are actively working towards its redevelopment.
It is important for property owners to be proactive in their efforts to avoid business rates on empty property. By keeping detailed records of any changes to the property, maintaining evidence of efforts to re-let or sell the property, and staying informed about the latest regulations and loopholes, property owners can maximize their chances of successfully avoiding business rates. Consulting with a professional advisor, such as a chartered surveyor or tax specialist, can also help property owners navigate the complex rules and regulations surrounding business rates on empty property.
In conclusion, there are several strategies that property owners can use to legally avoid or minimize business rates on empty property. From claiming Small Business Rate Relief to using the material change in circumstances loophole, property owners have a range of options available to them. By staying informed, being proactive, and seeking professional advice when needed, property owners can successfully reduce the financial burden of business rates on their empty property.