When it comes to owning or leasing commercial property, one factor that many business owners often overlook is the issue of unoccupied business rates. These rates, also known as empty property rates, can significantly impact a business’s bottom line if the property remains vacant for an extended period.
In this article, we will delve deeper into what unoccupied business rates are, how they are calculated, and what you can do to potentially reduce or avoid them altogether.
What Are unoccupied business rates?
Unoccupied business rates are a tax levied on commercial properties that are empty for an extended period. The purpose of these rates is to discourage property owners from leaving their properties vacant for too long, as empty buildings can have a negative impact on the local economy and community.
The rates are set by the local government and are typically charged at the same rate as the business rates that would be paid if the property were occupied. This means that property owners are still required to pay a substantial amount even if their property is not generating any income.
How Are unoccupied business rates Calculated?
The calculation of unoccupied business rates can vary depending on the local authority. In general, the rates are based on the rateable value of the property and are typically charged at 100% for the first three months that the property is empty. After the initial three months, the rate may increase to 150% of the normal business rates.
Property owners should be aware that they are liable to pay unoccupied business rates from the day that their property becomes empty. This means that even if a property is empty for just a few days, the owner may still be required to pay the full rate for that period.
How Can You Reduce or Avoid unoccupied business rates?
There are several ways that property owners can potentially reduce or avoid unoccupied business rates. One option is to temporarily occupy the property with minimal or no use, as certain exemptions may apply in such cases.
Another option is to actively market the property for sale or lease, as some local authorities may grant a temporary exemption if the property is actively being marketed. It is important to note that this exemption is not automatic and property owners will need to provide evidence of their marketing efforts.
If the property is undergoing renovation or structural repairs, the owner may be eligible for a temporary exemption from unoccupied business rates. However, it is crucial to notify the local authority of the works being carried out and provide evidence of the ongoing renovation.
Property owners should also consider exploring the option of short-term leases or licenses for their vacant property. By allowing a temporary tenant to occupy the property, even for a short period, owners may be able to avoid paying unoccupied business rates.
Conclusion
Unoccupied business rates can present a significant financial burden for property owners, especially if the property remains vacant for an extended period. Understanding how these rates are calculated and knowing what exemptions or reductions may be available is crucial for minimizing the impact on your business’s finances.
By actively marketing your property, exploring temporary occupancy options, and keeping the local authority informed of any renovations or repairs, you may be able to reduce or avoid unoccupied business rates altogether. Remember, every situation is unique, so it is always best to seek advice from a professional to ensure that you are taking the right steps to manage your property effectively and efficiently.