Vacant business rates, often referred to as business rates on empty properties, are a significant concern for many businesses in the UK. These rates are charged on commercial properties that are unoccupied for a certain period of time, typically three months or more. The purpose of vacant business rates is to encourage property owners to keep their buildings occupied and in use, as empty properties can have a negative impact on local communities and economies.
The issue of vacant business rates is a complex one, with both benefits and challenges for businesses. In this article, we will explore how vacant business rates are calculated, the impact they can have on businesses, and what businesses can do to minimize their liability for these rates.
Calculating vacant business rates
Vacant business rates are calculated based on the rateable value of the property in question. The rateable value is determined by the Valuation Office Agency (VOA) and represents the open market rental value of the property as of a specific date. The actual rate payable on the property is then calculated by multiplying the rateable value by the current empty property multiplier, which is set by the government each year.
In England, the standard empty property rate for commercial properties is set at 3.0 times the normal business rates multiplier. This means that businesses with empty properties are liable to pay three times their normal business rates bill. However, there are some exceptions to this rule, such as properties with a rateable value of less than £2,900, which are exempt from empty property rates.
Impact on Businesses
The impact of vacant business rates on businesses can be significant, particularly for small businesses and property owners. Paying empty property rates can place a considerable financial burden on businesses that are already struggling to generate income from their properties. In some cases, the cost of vacant business rates can exceed the rental income that the property would generate if it were occupied, making it difficult for property owners to justify keeping the property vacant.
Moreover, the presence of empty properties in a local area can have a negative impact on the surrounding community and economy. Vacant properties can attract vandalism, anti-social behavior, and other criminal activities, which can deter potential customers and investors from visiting or investing in the area. This can create a vicious cycle where businesses struggle to attract customers and generate income, leading to further vacancies and declines in property values.
Mitigating Liability
There are several ways in which businesses can mitigate their liability for vacant business rates. One common strategy is to apply for a temporary exemption from empty property rates. In England, businesses can apply for a six-month exemption from empty property rates if the property has been newly constructed or substantially refurbished, or if the property is listed or has been subject to a building preservation notice.
Another option for businesses is to explore alternative uses for their empty properties. For example, businesses can consider renting out the property on a short-term or temporary basis, or using the property for storage or other non-rateable activities. By finding ways to generate income from their empty properties, businesses can reduce their liability for vacant business rates and potentially turn a negative situation into a positive one.
In some cases, businesses may also be able to claim relief from empty property rates if they are unable to occupy their property due to specific circumstances, such as a legal injunction or a decision by the local planning authority. Businesses should consult with their local council or a qualified property advisor to determine if they are eligible for relief and to explore other options for reducing their liability for vacant business rates.
Conclusion
Vacant business rates are a significant concern for businesses in the UK, with the potential to place a considerable financial burden on property owners and impact local communities and economies. Understanding how vacant business rates are calculated, the impact they can have on businesses, and the strategies available for mitigating liability is essential for businesses looking to navigate this complex issue. By exploring alternative uses for their empty properties, applying for exemptions or relief, and seeking advice from qualified professionals, businesses can minimize their liability for vacant business rates and potentially turn a challenging situation into an opportunity for growth and success.