When a property sits empty, it can have significant financial implications for the owner. Not only are they missing out on potential rental income, but they may also be required to pay business rates on the vacant property. This additional expense can add up quickly and put a strain on the owner’s finances. In this article, we will explore the concept of business rates on vacant property and discuss ways in which owners can mitigate the financial burden.
Business rates, also known as non-domestic rates, are a tax imposed on the occupation of non-residential properties in the UK. These rates are levied by local authorities and are based on the rateable value of the property. The rateable value is assessed by the Valuation Office Agency (VOA) and represents the estimated annual rental value of the property as of a specific date.
In the case of vacant properties, owners are still required to pay business rates even if there is no income being generated from the property. This can be a significant financial burden, especially for owners who are struggling to find tenants or who are in the process of refurbishing the property for future use. In some cases, owners may be entitled to a discount on their business rates if the property has been empty for an extended period of time. However, this discount is usually temporary and does not alleviate the overall financial burden.
One way in which owners can reduce their business rates liability on vacant property is by taking advantage of exemptions and reliefs that are available. For example, properties that are undergoing major repair work or structural alterations may be eligible for a temporary exemption from business rates. Owners can also apply for empty property relief, which provides a 100% discount on business rates for the first three months that a property is empty. After this initial period, the discount is reduced to 10% for most properties, although some industrial properties may qualify for a 100% discount.
Another option for owners looking to reduce their business rates liability on vacant property is to explore the possibility of leasing the property to a charity or community interest group. Properties that are occupied by registered charities or non-profit organizations are eligible for an 80% discount on business rates, regardless of whether the property is empty or in use. By leasing the property to a qualifying organization, owners can significantly reduce their business rates liability and support a worthy cause at the same time.
Owners of vacant property may also consider appealing the rateable value of their property in order to lower their business rates liability. The VOA reassesses rateable values every five years, but owners can request a reassessment if they believe that the current value does not accurately reflect the property’s rental value. By providing evidence such as rental data for comparable properties or details of any defects or limitations that may affect the property’s value, owners may be able to secure a lower rateable value and reduce their business rates liability accordingly.
In conclusion, business rates on vacant property can be a significant financial burden for owners, especially when there is no income being generated from the property. However, there are steps that owners can take to mitigate this burden, such as applying for exemptions and reliefs, leasing the property to a qualifying organization, or appealing the rateable value of the property. By exploring these options and seeking professional advice where necessary, owners can reduce their business rates liability and alleviate some of the financial strain associated with owning vacant property.