When it comes to running a business, there are a lot of expenses that must be taken into consideration. From rent and utilities to employee wages and inventory costs, the list can seem never-ending. One expense that can often catch business owners off guard is void business rates. Also known as empty property rates, these rates can significantly impact a business’s bottom line if not properly understood and managed.
void business rates are a form of tax that is charged on commercial properties that are unoccupied for a certain period of time. In the United Kingdom, businesses are required to pay business rates on any non-domestic property they occupy, including shops, offices, warehouses, and factories. However, if a property is left empty for an extended period of time, business rates can apply even if the property is not being used for any business activities.
The purpose of void business rates is to encourage property owners to keep their buildings occupied, thus preventing properties from sitting empty for extended periods of time. By charging business rates on empty properties, the government aims to deter property owners from leaving buildings vacant for long periods and encourage them to either rent out the space or sell it to someone who will make use of it.
Business rates are typically charged by local authorities and are calculated based on the rateable value of the property. The rateable value is determined by the Valuation Office Agency (VOA) and is used to calculate how much a business should pay in rates each year. Properties with a rateable value below a certain threshold may be eligible for business rates relief, while properties that are left empty for an extended period may be subject to void business rates.
It’s important for business owners to be aware of void business rates and how they can impact their finances. Leaving a property empty for an extended period of time can result in significant financial penalties, as business rates can be charged at the full rate for three months after a property becomes vacant. After this initial three-month period, the property owner may be eligible for a 100% relief on the business rates for the next three months, followed by a 50% relief for the subsequent three months.
If a property remains vacant for more than six months, the property owner may be required to pay the full rate of business rates on the property. This can be a substantial financial burden for businesses that are struggling to find tenants for their properties or are in the process of renovating a property before putting it on the market.
There are, however, some exemptions to void business rates that business owners should be aware of. Properties that are undergoing major structural renovations or are being demolished may be exempt from business rates for a certain period of time. Additionally, properties that are classified as being unable to be used due to strict planning restrictions may also be exempt from business rates.
Business owners can also apply for temporary exemptions from void business rates if they can prove that they are actively seeking to rent out or sell the property. This can help to alleviate some of the financial burden of void business rates while the property owner works to find a suitable tenant or buyer for the property.
In order to avoid void business rates, business owners should take proactive steps to keep their properties occupied. This can include actively marketing the property to attract potential tenants or buyers, offering incentives such as rent discounts or free rent periods, and keeping the property in good condition to attract potential occupants.
Overall, void business rates are an important consideration for business owners who own commercial properties. By understanding the implications of void business rates and taking proactive steps to keep their properties occupied, business owners can avoid unnecessary financial penalties and ensure that their properties are being put to good use.