When it comes to commercial properties, there are a variety of costs that businesses must consider. One of the expenses that can catch many entrepreneurs off guard is void business rates. These rates can be a significant financial burden for businesses, especially if they are not familiar with how they work. In this article, we will provide an overview of void business rates, what they are, and how they can impact your bottom line.
void business rates, also known as empty property rates, are taxes that are levied on commercial properties that are unoccupied for an extended period of time. In the United Kingdom, business rates are the tax that businesses pay on the properties they occupy, similar to council tax for residential properties. However, when a commercial property is empty, the owner is still required to pay business rates, albeit at a reduced rate.
The concept of void business rates was introduced to prevent property owners from intentionally keeping properties empty to avoid paying taxes. The idea behind these rates is to incentivize property owners to either occupy their properties or find tenants for them. By imposing void business rates, the government aims to discourage property owners from leaving their properties vacant for extended periods, which can have a negative impact on the local economy.
The rateable value of a property, which is used to calculate business rates, is based on the estimated annual rental value of the property. When a property becomes unoccupied, the owner is still required to pay business rates, but at a reduced rate. In England, for example, business owners are required to pay 100% of the business rates for the first three months that a property is empty. After three months, the rates are typically reduced to 50% of the full amount.
It is important for property owners to be aware of the rules and regulations surrounding void business rates, as failing to pay these rates can result in penalties and legal action. Property owners may also be eligible for exemptions or relief from void business rates in certain circumstances, such as when a property is undergoing renovation or repairs. It is advisable to consult with a professional advisor or local council to determine if you qualify for any exemptions or relief from void business rates.
For businesses that are struggling to pay void business rates on empty properties, there are several options available to help alleviate the financial burden. One option is to negotiate with the local council to establish a payment plan for the outstanding rates. Property owners may also consider leasing or subletting the property to generate rental income, which can help offset the cost of void business rates.
In some cases, property owners may also be eligible for temporary relief from void business rates, such as the government’s coronavirus business rates relief scheme. The scheme, which was introduced in response to the COVID-19 pandemic, provides a 100% relief on business rates for businesses in the retail, hospitality, and leisure sectors that have been affected by the crisis. Property owners should check with their local council to determine if they are eligible for any relief or exemptions from void business rates.
In conclusion, void business rates can be a significant financial burden for property owners, especially if they are not familiar with how these rates work. It is important for businesses to be aware of the rules and regulations surrounding void business rates, as failing to pay these rates can result in penalties and legal action. By understanding void business rates and exploring options for relief or exemptions, property owners can navigate this aspect of commercial property ownership and mitigate the financial impact on their businesses.