When it comes to owning commercial property, there are various costs that property owners must consider. One of the significant expenses that need to be factored in is the rates payable on empty commercial property. Rates, also known as business rates, are a tax on commercial properties that are used to fund local services provided by the local council. In this article, we will explore how rates payable on empty commercial property are calculated, the implications of leaving a property empty, and potential exemptions that property owners may be eligible for.
rates payable on empty commercial property are calculated based on the rateable value of the property. The rateable value is an estimate of the open market rental value of a property as of a certain date, usually set by the Valuation Office Agency (VOA) in England, the Scottish Assessors in Scotland, or the Land and Property Services in Northern Ireland. The rateable value is revalued every five years to reflect changes in the property market.
Once the rateable value is determined, it is then multiplied by the national non-domestic multiplier, also known as the business rates multiplier, to calculate the rates payable. The business rates multiplier is set by the government and is used to determine the overall amount of rates payable on a property. In England, for example, the standard multiplier for the 2021/2022 financial year is 51.2p, while in Scotland, it is 49.8p.
Property owners are legally required to pay rates on their commercial property, whether it is occupied or empty. However, the rates payable on empty commercial property can be a significant financial burden for property owners, especially if the property remains vacant for an extended period. Leaving a property empty not only incurs rates payable but also leads to missed opportunities for rental income or potential capital appreciation.
To address the issue of rates payable on empty commercial property, the government has introduced certain exemptions and reliefs that property owners can apply for. One such relief is the Empty Property Relief, which allows property owners to claim a 100% exemption on rates payable for a specified period. In England, property owners may be eligible for a 100% exemption for the first three months after a property becomes empty and unfurnished, followed by a 50% exemption for a further three months. In Scotland and Northern Ireland, the Empty Property Relief scheme varies slightly, but the overall aim is to provide financial support to property owners facing difficulties due to empty properties.
In addition to Empty Property Relief, there are other exemptions and reliefs available to property owners, depending on the specific circumstances of the property. For example, properties undergoing structural repairs or redevelopment may be eligible for the Listed Building Exemption or the Small Business Rate Relief, which can help lower the amount of rates payable.
It is essential for property owners to be aware of the potential exemptions and reliefs available to them to help mitigate the financial impact of rates payable on empty commercial property. By taking advantage of these schemes, property owners can reduce their overall tax liability and make owning commercial property a more viable investment.
In conclusion, rates payable on empty commercial property are an unavoidable cost that property owners must consider when owning a commercial property. Understanding how rates are calculated, the implications of leaving a property empty, and the various exemptions and reliefs available can help property owners navigate the complex world of business rates and make informed decisions regarding their property investments.