When it comes to owning property for business purposes, there are a variety of costs and fees that must be taken into consideration One such expense is business rates, which are taxes that are levied on non-domestic properties in the UK These rates are determined based on the rateable value of the property and are used to fund local services and infrastructure.
However, what happens when a property is vacant? In such cases, the owner of the property is still liable to pay business rates, even though the property is not generating any income This can often be a significant financial burden for property owners, especially if the property has been vacant for an extended period of time.
The reasoning behind business rates on vacant property is to discourage property owners from leaving properties empty for extended periods of time The government wants to incentivize property owners to either occupy the property themselves or rent it out to others in order to contribute to the local economy.
Business rates on vacant property can be a complex issue to navigate, so it’s important for property owners to understand how they are calculated and what options are available to reduce or mitigate these costs.
Calculating Business Rates on Vacant Property
Business rates on vacant property are determined based on the rateable value of the property This rateable value is assessed by the Valuation Office Agency (VOA) and represents the annual rental value of the property as of a specific date The VOA takes into consideration factors such as the size, location, and potential rental income of the property when determining the rateable value.
Once the rateable value is established, the local council uses a multiplier set by the government to calculate the actual amount of business rates that must be paid In England, the standard multiplier for 2021-2022 is 51.2p, meaning that properties with a rateable value of £20,000 would pay £10,240 in business rates for the year.
Reducing Business Rates on Vacant Property
While business rates on vacant property are unavoidable to some extent, there are ways that property owners can reduce or mitigate these costs business rates vacant property. One option is to apply for an exemption or relief from business rates.
For example, if a property is undergoing major refurbishment or structural repairs, the owner may be eligible for a 100% exemption from business rates for a period of 3 months (or 6 months for industrial properties) This can provide some financial relief to property owners who are actively working to get their property back into use.
Another option is to apply for a hardship relief, which is granted at the discretion of the local council This relief is typically reserved for properties that are experiencing exceptional circumstances, such as economic downturns or changes in market conditions Property owners must be able to demonstrate that paying the full business rates would cause undue financial hardship in order to qualify for this relief.
Furthermore, property owners can also consider leasing the property on a short-term basis to a charity or community organization Properties that are occupied by a charity or similar organization may be eligible for an 80% discount on business rates, which can significantly reduce the financial burden on the property owner.
Conclusion
Business rates on vacant property can be a significant financial burden for property owners, but there are options available to reduce or mitigate these costs By understanding how business rates are calculated and exploring options for exemptions or reliefs, property owners can navigate this complex issue more effectively.
Ultimately, the goal of business rates on vacant property is to incentivize property owners to keep their properties occupied and contributing to the local economy By working with local councils and exploring all available options, property owners can find ways to manage their business rates and avoid unnecessary financial strain.