As a commercial property owner, one of your main concerns is likely keeping costs down and maximizing profits. One particularly hefty cost that can eat into your bottom line is business rates on empty property. To ease this burden, it’s important to understand how you can avoid paying business rates on vacant commercial properties.
Business rates, also known as non-domestic rates, are taxes imposed by local authorities on most non-residential properties, including shops, offices, and industrial units. These rates are based on the rental value of the property and are set by the government. However, empty commercial properties are subject to different rules when it comes to business rates.
In the past, vacant commercial properties were given a 100% exemption on business rates for the first three months after becoming empty. This was reduced to 50% after the initial three-month period. However, in recent years, the rules surrounding business rates on empty properties have changed yet again.
Since April 2017, the government has imposed stricter rules on business rates for empty properties. Now, business owners must pay 100% of their business rates on properties that have been empty for longer than three months, with a doubling of rates for properties empty for over two years. This change was put in place to encourage property owners to bring their empty spaces back into use.
However, there are still ways that commercial property owners can avoid paying business rates on empty properties. One common method is to take advantage of the small business rate relief scheme. This scheme allows businesses with a rateable value below a certain threshold to claim relief on their business rates. By splitting your empty property into smaller units and applying for small business rate relief for each unit, you could potentially reduce the amount of business rates you have to pay.
Another option is to demolish or renovate the property to make it eligible for business rates relief. Properties undergoing major works or structural changes are exempt from paying business rates for up to 18 months. This can be a costly option, but in the long run, it may save you money on business rates.
If you’re unable to renovate or subdivide your property, you may still be able to avoid paying business rates by leasing the property to a charity or community group. Charities are eligible for an 80% discount on business rates for properties used for charitable purposes. By leasing your empty property to a charity, you could significantly reduce the amount you have to pay in business rates.
It’s important to note that simply leaving your property empty and unused is not a viable option for avoiding business rates. Councils and local authorities have the power to charge full business rates on empty properties and have been cracking down on businesses that try to exploit loopholes in the system.
Overall, the best way to avoid paying business rates on empty property is to look for legitimate ways to use or occupy the space. Whether that means subdividing the property, renovating it, or leasing it to a charity, finding a way to bring your empty property back into use is the most effective way to reduce your business rates burden.
In conclusion, avoiding business rates on empty property can be a challenge, but with careful planning and strategic thinking, commercial property owners can find ways to minimize this cost. By exploring options such as small business rate relief, property renovation, and leasing to charities, you can take proactive steps to reduce the amount you have to pay in business rates. Remember, it’s important to stay informed about the latest rules and regulations regarding business rates to ensure that you are in compliance with the law.