When it comes to owning and managing commercial property, there are numerous expenses that property owners must account for. One of the most significant costs that owners of commercial property may face is business rates. Business rates are taxes levied on non-domestic properties, including shops, offices, and warehouses. While paying business rates is a legal requirement, property owners may be surprised to learn that they may still be liable for rates even if their property sits empty. In this article, we will explore the rates payable on empty commercial property and what property owners need to know to avoid unwanted financial surprises.
In the UK, business rates are calculated based on the rateable value of a property, which is determined by the Valuation Office Agency (VOA). The rateable value is an estimate of the open market rental value of the property at a specific date, which is usually reassessed every five years. Property owners are then charged a percentage of the rateable value as their business rates bill.
When a commercial property is empty, property owners may be surprised to learn that they are still liable to pay business rates. According to current legislation, property owners are eligible for a three-month exemption from paying rates on empty commercial property. However, after this initial three-month period, property owners are required to pay the full business rates bill, regardless of whether the property is occupied or not.
To help alleviate the financial burden on property owners of empty commercial properties, the UK government introduced certain relief schemes. One such relief scheme is the Empty Property Relief, which allows property owners to claim a 50% discount on their business rates bill for up to three months. This relief can be extended for a further three months if the property remains empty and meets certain criteria. However, it’s important to note that not all properties are eligible for Empty Property Relief, and property owners should check with their local council to determine if they qualify.
Property owners can also apply for the Small Business Rate Relief scheme if their property has a rateable value below a certain threshold. This relief scheme can significantly reduce the amount of business rates that property owners are required to pay, making it a valuable option for owners of small commercial properties.
In some cases, property owners may be eligible for exemptions from paying business rates on their empty commercial property. Properties that are classified as industrial warehouses may be eligible for an exemption from business rates for up to six months, as long as they meet certain criteria. Additionally, properties that are undergoing major refurbishment or structural changes may also qualify for an exemption from rates during this period.
Despite these relief schemes and exemptions, property owners of empty commercial properties may still find themselves facing a significant financial burden. It’s essential for property owners to be aware of their legal obligations regarding business rates on empty properties and to factor these costs into their financial planning. Failure to pay business rates on empty commercial property can result in hefty fines and legal consequences, so property owners should take proactive steps to ensure compliance with the law.
One way for property owners to mitigate the financial impact of paying business rates on empty commercial properties is to explore alternative uses for the property. Property owners can consider renting out the property on a short-term basis, such as pop-up shops or event spaces, to generate income and offset the costs of business rates. Additionally, property owners can explore options for converting the property to a different use that may be exempt from business rates, such as residential development.
In conclusion, rates payable on empty commercial property can be a significant financial burden for property owners. It’s essential for property owners to understand their legal obligations regarding business rates and to explore relief schemes and exemptions that may be available to them. By taking proactive steps to manage their empty commercial properties and exploring alternative uses, property owners can minimize the financial impact of business rates and ensure compliance with the law.