Business rates are taxes that are levied on commercial properties in the UK. They are calculated based on the rateable value of the property and are payable by the occupier or owner of the property. However, in certain circumstances where a property is empty, business rates still apply. These rates are commonly referred to as void business rates.
Void business rates can be a significant financial burden for property owners, especially if the property remains empty for an extended period of time. In this article, we will explore what void business rates are, why they are charged, and how property owners can mitigate their impact.
What are void business rates?
Void business rates are the business rates that are charged on empty commercial properties. These rates are applicable to properties that are unoccupied and are not used for any business purposes. The purpose of charging void business rates is to discourage property owners from leaving their properties empty for long periods of time.
Under current UK legislation, commercial properties are exempt from paying business rates for the first three months that they are empty. However, after this initial three-month period, property owners are required to pay full business rates on their empty properties. This can be a significant financial burden, especially for property owners who are struggling to find tenants for their properties.
Why are void business rates Charged?
One of the main reasons why void business rates are charged is to prevent property owners from leaving their properties empty as a means of avoiding paying business rates altogether. Without this deterrent, property owners could potentially leave their properties vacant for extended periods of time, which could have negative impacts on the local economy and community.
Charging void business rates also helps to encourage property owners to actively market their properties and find new tenants. By imposing financial penalties on empty properties, property owners are incentivized to take action and find new occupants for their properties.
How Can Property Owners Mitigate the Impact of void business rates?
There are several strategies that property owners can employ to mitigate the impact of void business rates on their finances. One common approach is to actively market the property and find new tenants as quickly as possible. By filling the property with a new tenant, property owners can avoid paying void business rates altogether.
Another strategy is to seek relief from void business rates through various exemptions and reliefs that are available. For example, certain properties may be eligible for a 100% exemption from void business rates if they meet specific criteria, such as being newly constructed or undergoing significant refurbishment.
Property owners can also consider appealing the rateable value of their property to reduce the amount of void business rates that they are required to pay. By providing evidence of the property’s condition and market value, property owners may be able to lower their rateable value and consequently reduce their business rates liability.
In some cases, property owners may also be able to negotiate a payment plan with the local council to spread out the cost of void business rates over a longer period of time. This can help property owners manage their cash flow and avoid being hit with a large lump sum payment.
Conclusion
Void business rates can be a significant financial burden for property owners, especially if their properties remain empty for extended periods of time. By understanding what void business rates are, why they are charged, and how property owners can mitigate their impact, property owners can take proactive steps to minimize their financial liabilities and maximize the potential of their properties.