When it comes to owning property, one of the common challenges that property owners face is dealing with business rates on vacant properties. These rates can often be a significant expense and can eat into your profits if not managed properly. In this article, we will discuss what business rates on vacant property are, how they are calculated, and provide some tips on how property owners can navigate this issue effectively.
business rates on vacant property are taxes that are levied on commercial properties that are unoccupied. These rates are usually charged by local authorities in the UK and are based on the rateable value of the property. The rateable value is an estimate of the yearly rental value of a property and is used to calculate the business rates that are due.
The issue with business rates on vacant property is that property owners are still required to pay these rates even if their property is empty and not generating any income. This can be a significant burden for property owners, especially if they are already dealing with other expenses such as mortgage payments, maintenance costs, and insurance premiums.
The calculation of business rates on vacant property is based on the rateable value of the property and is subject to certain exemptions and discounts. The rateable value is determined by the Valuation Office Agency (VOA) and is revalued every five years. The current multiplier for business rates in England is 49.9p (2021/22), meaning that for properties with a rateable value of £20,000, the annual business rates due would be £9,980.
There are certain exemptions and discounts that property owners can apply for to reduce their business rates liability on vacant properties. One of the main exemptions is the three-month exemption, where properties are exempt from paying business rates for the first three months that they are vacant. After this period, full rates will apply unless the property qualifies for another exemption.
Another exemption that property owners can apply for is the six-month exemption for newly built or refurbished properties. This exemption allows property owners to claim relief for the first six months that the property is vacant, giving them some breathing room to find tenants or buyers for the property.
In addition to exemptions, property owners can also apply for other discounts such as the 100% small business rate relief or the 100% rural rate relief. These discounts are available to properties that meet certain criteria and can significantly reduce the business rates liability on vacant properties.
To navigate business rates on vacant property effectively, property owners should take the following steps:
1. Keep track of the property’s rateable value and any changes to the multiplier.
2. Apply for any exemptions or discounts that the property may qualify for.
3. Consider options such as leasing the property out on a short-term basis to generate some income and avoid paying full business rates.
4. If the property is unlikely to be occupied in the near future, consider appealing the rateable value with the VOA to lower the business rates liability.
Overall, business rates on vacant property can be a significant expense for property owners, but with careful planning and effective management, it is possible to navigate this issue successfully. By staying informed about the rateable value of the property, applying for exemptions and discounts, and exploring alternative options to generate income, property owners can minimize their business rates liability and protect their profits.
In conclusion, understanding business rates on vacant property and taking proactive steps to manage them effectively is crucial for property owners. By staying informed, exploring all available options for relief, and seeking professional advice when needed, property owners can navigate this challenging aspect of property ownership and protect their bottom line.