When it comes to owning property for commercial use, understanding the various costs and fees associated with it is crucial in order to maximize your investment. One such cost that property owners need to be aware of is business rates on vacant property.
Business rates, also known as non-domestic rates, are taxes that business owners in the United Kingdom need to pay on the commercial properties they own or rent. These rates are calculated based on the rateable value of the property, which is determined by the Valuation Office Agency (VOA). If a property is left vacant, the owner is still required to pay business rates, albeit at a reduced rate after a certain period of time.
The rationale behind charging business rates on vacant property is to discourage property owners from leaving their properties empty. Empty properties can have a negative impact on the local community, leading to reduced footfall in the area and affecting property values. By charging business rates on vacant properties, the government aims to incentivize property owners to put their properties to use, either by renting them out or by occupying them with their own businesses.
It’s important for property owners to be aware of the regulations surrounding business rates on vacant property in order to avoid any potential penalties. In England, businesses that own vacant properties are required to notify their local council within 42 days of the property becoming vacant. Failure to do so could result in a fine of up to £2,500.
Once a property becomes vacant, the owner is entitled to a six-month grace period during which they are exempt from paying full business rates. After the six months have passed, the property owner will be required to pay 100% of the business rates unless the property falls under certain exemptions.
One way in which property owners can reduce the amount of business rates they need to pay on vacant property is by applying for empty property relief. Empty property relief allows property owners to receive a 100% discount on their business rates for the first three months that the property is vacant. After the initial three months, the property owner will be required to pay 100% of the business rates unless the property falls under certain exemptions.
In some cases, property owners may be eligible for extended empty property relief. This typically applies to properties that are undergoing major structural repairs or undergoing a change of ownership. Property owners should consult with their local council to determine if they qualify for extended empty property relief.
Another way in which property owners can reduce their business rates on vacant property is by seeking to have the property revalued by the VOA. If the rateable value of the property has decreased since the last valuation, the property owner may be able to lower their business rates accordingly. Property owners should keep in mind that the valuation process can be complex and may require the assistance of a professional.
In some cases, property owners may choose to occupy their vacant property themselves in order to avoid paying business rates. By using the property for their own business purposes, property owners can qualify for small business rate relief, which offers a discount on business rates for properties with a rateable value of less than £15,000.
Overall, understanding and managing business rates on vacant property is essential for property owners looking to maximize their investment. By staying informed of the regulations and potential exemptions available, property owners can avoid unnecessary penalties and reduce their overall costs. It’s important for property owners to consult with their local council or a professional advisor to ensure that they are in compliance with all regulations and are taking advantage of any available relief options.