Empty properties can be a headache for many businesses, not only because they are not generating any income, but also because of the hefty business rates that often come with them. The issue of business rates on empty property is one that many business owners struggle to understand and navigate. In this article, we will delve into the complexities of business rates on empty property, exploring why they exist, how they are calculated, and what businesses can do to mitigate the financial burden.
Business rates are a tax that businesses must pay on the non-residential properties they occupy. This tax is used to fund local services such as roads, schools, and waste collection. However, when a property is left empty, businesses are still required to pay business rates on it. This rule was put in place to discourage property owners from leaving their properties vacant for extended periods of time, as empty properties can attract vandalism, squatting, and other issues.
The calculation of business rates on empty property can be a confusing process. The rateable value of the property, which is determined by the Valuation Office Agency (VOA), is used as the basis for calculating the rates. In England, the standard multiplier for business rates is set by the government each year. For the 2021/2022 financial year, the multiplier is 51.2p. This multiplier is then applied to the rateable value of the property to determine the amount of business rates owed.
Many businesses are not aware that they may be eligible for exemptions or relief when it comes to paying business rates on empty property. In England, for example, businesses that occupy a property that has a rateable value of less than £2,900 are exempt from paying business rates. Additionally, businesses that occupy a property that has a rateable value of between £2,900 and £12,000 may be eligible for small business rate relief, which can significantly reduce their rates bill.
Businesses that are struggling to pay their business rates on empty property may also be able to apply for hardship relief. This relief is granted on a case-by-case basis and is intended to help businesses that are facing financial hardship due to their rates bill. It is worth noting, however, that hardship relief is not a long-term solution and businesses should explore other options for reducing their rates bill.
One of the most effective ways for businesses to reduce their business rates on empty property is to engage in property guardianship. Property guardianship involves placing temporary occupants in a vacant property to deter vandalism, squatting, and other issues. Many local authorities offer discounts on business rates for properties that are being used for property guardianship, making this a cost-effective way for businesses to reduce their rates bill.
Businesses that are unable to find occupants for their empty property may also consider demolishing or redeveloping the property. Certain types of redevelopment projects may be eligible for relief on business rates, such as projects that involve converting a property into residential units. Businesses should consult with their local authority to determine if their redevelopment project qualifies for relief on business rates.
In conclusion, business rates on empty property can be a significant financial burden for many businesses. However, there are options available for businesses to reduce their rates bill, such as applying for exemptions, relief, or engaging in property guardianship. By understanding the complexities of business rates on empty property and exploring all available options, businesses can navigate this challenging issue and mitigate the financial impact on their bottom line.