When it comes to running a business, there are various costs and expenses to consider. From utilities to staffing, these costs can quickly add up and put a strain on any company’s budget. One cost that often catches business owners off guard is unoccupied business rates.
unoccupied business rates, also known as empty property rates, are charges that are imposed on commercial properties that are empty for an extended period of time. In the United Kingdom, businesses are required to pay business rates on most non-domestic properties, including shops, offices, and warehouses. However, if a property remains unoccupied for a certain period, the owner may become liable for unoccupied business rates.
The rules surrounding unoccupied business rates can be complex and confusing for business owners. In general, a property is considered empty for business rates purposes if it is not being used, or if it is only being used for storage. There are some exceptions to this rule, such as properties that are being renovated or are temporarily unoccupied due to a change in ownership.
The rateable value of a property is used to calculate the amount of business rates that a business owner must pay. This value is based on the open market rental value of the property, and is assessed by the Valuation Office Agency (VOA). If a property is unoccupied, it will be given a rateable value, and the owner will be required to pay 100% of the business rates for that property.
Business owners should be aware that unoccupied business rates can be a substantial cost. In England, for example, unoccupied properties are subject to a 100% charge for the first three months, and a 50% charge thereafter. In Wales, the charge is also 100% for the first three months, but increases to 100% after that. This can add up to a significant financial burden for businesses that are struggling to keep their property occupied.
There are some exemptions and reliefs available to business owners who are liable for unoccupied business rates. For example, properties with a rateable value of less than £2,900 are exempt from unoccupied business rates. There are also various reliefs available for properties that are undergoing renovations or are temporarily unoccupied due to exceptional circumstances.
It is important for business owners to be aware of the rules surrounding unoccupied business rates and to take appropriate steps to minimize their liability. One way to do this is by taking proactive steps to keep the property occupied. This can include marketing the property effectively, offering incentives to potential tenants, and working with a commercial property agent to find suitable tenants.
Another option for business owners is to consider applying for one of the available reliefs or exemptions. For example, if a property is undergoing renovation, the owner may be able to apply for a temporary exemption from unoccupied business rates. Similarly, if a property is being used for charitable purposes, the owner may be eligible for relief on their business rates.
In some cases, business owners may decide that it is in their best interest to demolish or sell the property in order to avoid paying unoccupied business rates. While this can be a drastic measure, it may be necessary in order to avoid incurring additional costs. Business owners should carefully weigh the pros and cons of this option before making a decision.
Overall, unoccupied business rates can be a significant cost for business owners, especially in challenging economic times. By understanding the rules surrounding unoccupied business rates and taking proactive steps to minimize their liability, business owners can better manage this expense and protect their bottom line. It is important for business owners to seek advice from a qualified professional if they have any questions or concerns about unoccupied business rates.