When it comes to running a business, there are a myriad of costs that business owners need to consider. One such cost that often gets overlooked is the business rates on unoccupied premises. These rates can be a significant financial burden for businesses that have vacant properties, and it is important for business owners to understand how they are calculated and what can be done to minimize them.
Business rates are taxes that are charged on most non-domestic properties, including shops, offices, factories, and warehouses. These rates are based on the rateable value of the property, which is determined by the Valuation Office Agency (VOA). The rateable value is essentially an estimate of how much rent the property could fetch on the open market at a given date.
When a property is unoccupied, it is still subject to business rates. However, the rules around business rates on unoccupied premises are slightly different from those for occupied properties. In England, for example, unoccupied commercial properties are exempt from business rates for the first three months after they become empty. After the initial three-month period, the property owner is required to pay the full business rates unless the property falls under certain exemptions.
One common exemption is that properties with a rateable value of less than £2,900 are exempt from business rates when they are unoccupied. Additionally, properties owned by charities or community amateur sports clubs are also exempt from business rates. It is important for property owners to check with their local council to see if their property falls under any of these exemptions.
For properties that do not qualify for exemptions, there are ways to mitigate the impact of business rates on unoccupied premises. One option is to apply for an empty property rate relief, which can provide a 100% discount on business rates for certain types of property. This relief is available for properties that have been unoccupied for at least three months and are not in use. It is important to note that the eligibility criteria for empty property rate relief can vary depending on the location of the property, so property owners should check with their local council for more information.
Another option is to consider leasing the property out on a short-term basis. By doing so, the property can be classified as occupied, and the property owner may be eligible for small business rate relief, which can provide a discount on business rates for properties with a rateable value of less than £15,000.
It is also worth exploring the option of appealing the rateable value of the property. If the property owner believes that the rateable value is too high, they can lodge an appeal with the VOA. If successful, the rateable value of the property may be reduced, resulting in lower business rates.
Ultimately, it is important for business owners to be aware of the implications of business rates on unoccupied premises. Failure to pay these rates can result in penalties and legal action, so it is crucial to stay on top of these costs. By understanding the rules and regulations surrounding business rates on unoccupied premises and exploring options for relief, business owners can minimize the financial impact of having vacant properties.
In conclusion, business rates on unoccupied premises can be a significant financial burden for property owners. Understanding how these rates are calculated and exploring options for relief can help alleviate this burden. By staying informed and proactive, business owners can effectively manage the costs associated with vacant properties and ensure that they are not caught off guard by unexpected expenses.