When it comes to owning and managing commercial property, there are many factors that landlords and property owners must consider One important aspect that often gets overlooked is the issue of business rates on vacant property Business rates are taxes paid on non-residential properties in the UK, and they can be a significant expense for property owners Understanding how business rates are calculated and how they apply to vacant property is crucial for anyone involved in the commercial property market.
Business rates are a tax charged on most non-domestic properties such as shops, offices, warehouses, and factories They are calculated based on the rateable value of the property, which is set by the Valuation Office Agency (VOA) The rateable value is an estimate of the annual rental value of the property as of a specific date, known as the ‘valuation date’ The VOA revalues properties every five years to ensure that they are up to date.
The business rates payable on a property are calculated by multiplying the rateable value by the appropriate multiplier, also known as the uniform business rate (UBR) The UBR is set by the government each year and varies depending on the location of the property For example, properties in London typically have a higher UBR than those in other parts of the country The final amount of business rates payable may also be subject to any reliefs or exemptions that the property may be eligible for.
One key issue that property owners must be aware of is the issue of business rates on vacant property When a commercial property becomes vacant, the owner is still liable to pay business rates on it unless the property is exempt from rates altogether This can be a significant financial burden for property owners, especially if the property remains vacant for an extended period.
There are a few exemptions that may apply to vacant properties when it comes to business rates business rates vacant property. For example, properties that are undergoing major repairs or structural changes may be eligible for a temporary exemption from rates This exemption lasts for three months from the date that the property becomes vacant, but it can be extended to six months if the repairs are still ongoing Similarly, newly built properties are also exempt from rates for the first three months after they are completed and become available for occupation.
Another exemption that may apply to vacant properties is the empty property rate relief This relief applies to properties that have been vacant for more than three months and can reduce the amount of business rates payable by 100% for the first three months and 50% thereafter However, it is important to note that not all properties are eligible for this relief, and property owners must apply for it with their local council.
Property owners must be proactive in managing their vacant properties to minimize the impact of business rates One way to reduce the amount of rates payable on a vacant property is to actively market it for rent or sale By demonstrating that efforts are being made to find a new occupant for the property, owners may be able to apply for the empty property rate relief and reduce their rates bill.
Another option for property owners is to consider demolishing the property if it is no longer economically viable Properties that have been demolished or are undergoing significant redevelopment are exempt from business rates for up to 18 months This can provide property owners with some financial relief while they work on bringing a new development to the site.
In conclusion, business rates on vacant property can be a significant expense for property owners, but there are ways to manage this cost effectively By understanding how business rates are calculated and being aware of the exemptions that may apply to vacant properties, owners can take steps to minimize their rates bill and protect their investment Being proactive in managing vacant properties and exploring all available options can help property owners navigate the complexities of the business rates system and ensure that they are not paying more than necessary.