Business rates on empty commercial property, also known as the “business rates empty commercial property,” are a significant concern for property owners and investors. These rates are a tax levied on non-residential properties in the UK and can have a substantial financial impact on businesses. Understanding how business rates are calculated and the exemptions that may apply is crucial for property owners to mitigate costs and maximise the return on their investments.
The business rates system in the UK is a complex one, with rates being set by the government and calculated based on the rateable value of a property. The rateable value is determined by the Valuation Office Agency (VOA) and is a reflection of the rental value of the property as of a certain date. This rateable value is then multiplied by the Uniform Business Rate (UBR), set annually by the government, to calculate the actual business rates payable.
When a commercial property becomes empty, the responsibility for paying business rates falls on the property owner. This can be a significant burden, especially for property owners who are unable to find tenants or need to undertake major renovations before the property can be leased. In some cases, property owners may also be liable for a full year of business rates even if the property is only vacant for a short period.
To mitigate the financial impact of business rates on empty commercial property, property owners can apply for exemptions or reliefs that may be available. For example, properties that are empty for a short period, usually three months or less, are granted a temporary exemption from paying business rates. This is known as the “empty property rate relief” and can provide property owners with some financial relief during periods of vacancy.
Additionally, certain types of properties may be exempt from paying business rates altogether. These exemptions apply to properties such as agricultural land and buildings, buildings used for training or welfare purposes, and listed buildings. Property owners should check with their local council to determine if their property qualifies for any exemptions or reliefs under the business rates system.
Another option for property owners looking to reduce their business rates liability on empty commercial property is to lease the property to a charity or community amateur sports club. Properties leased to these organisations are eligible for an 80% discount on business rates, which can help to offset the costs of maintaining an empty property while also supporting charitable causes in the community.
In some cases, property owners may choose to demolish or redevelop an empty commercial property to avoid paying business rates altogether. The government offers a demolition relief scheme that provides a 100% exemption from business rates for properties that have been demolished. Similarly, properties undergoing major redevelopment works may qualify for a temporary exemption from paying business rates until the works are complete and the property is ready for occupation.
Despite these exemptions and reliefs, business rates on empty commercial property remain a significant financial burden for property owners. The government has faced criticism for its business rates system, with many arguing that the current system is outdated and unfair, particularly for small businesses and property owners struggling to make ends meet.
In recent years, there have been calls for reforms to the business rates system to make it fairer and more transparent. Some have proposed replacing the current system with a land value tax or introducing more frequent revaluations to better reflect changes in property values. Others have advocated for greater support for small businesses and property owners facing financial hardship due to high business rates on empty properties.
In conclusion, business rates on empty commercial property are a complex issue that poses a significant financial burden for property owners and investors. Understanding how business rates are calculated and the exemptions that may apply is crucial for property owners to mitigate costs and maximise the return on their investments. While there are exemptions and reliefs available, the current business rates system remains a contentious issue that requires ongoing reform to better support businesses and property owners in the UK.