Business rates are a key consideration for any business operating in the UK. They are a tax that businesses must pay on the non-domestic properties they occupy, and the rates are set by the government and collected by local authorities. However, what happens when a premises is left unoccupied? In this article, we will explore the impact of business rates on unoccupied premises.
When a business premises becomes unoccupied, the responsibility for paying business rates falls on the owner of the property rather than the occupier. This can create a significant financial burden for property owners, particularly if the premises remain unoccupied for an extended period of time.
The rate at which business rates are calculated for unoccupied premises is different from that of occupied ones. The government introduced a change in 2008, known as the Empty Property Rate, which increased the amount of rates payable on unoccupied properties. This change was designed to incentivise property owners to bring their premises back into use, rather than leaving them empty for extended periods.
Under the Empty Property Rate scheme, most unoccupied non-domestic properties are subject to a 100% rates charge for the first three months that they are empty. After this initial period, the rates charge is reduced to 50% for industrial and warehouse properties, and to 90% for other types of property.
The introduction of the Empty Property Rate has proven controversial, with some arguing that it places an unfair financial burden on property owners who may be struggling to find tenants for their premises. Critics of the scheme argue that it penalises property owners for circumstances beyond their control, such as changes in the economic climate or difficulties in finding suitable tenants.
In response to these concerns, the government has introduced a number of exemptions to the Empty Property Rate scheme. For example, properties with a rateable value of less than £2,900 are exempt from the rates charge altogether, while properties owned by charities or community amateur sports clubs are also exempt.
However, for many property owners, the burden of paying business rates on unoccupied premises remains a significant challenge. In some cases, the rates charge can exceed the rental income that the property owner would receive if they were able to find a tenant, creating a financial disincentive to bring the premises back into use.
There are a number of steps that property owners can take to reduce the impact of business rates on unoccupied premises. For example, they can apply for a temporary exemption from the rates charge if they can demonstrate that they are actively seeking a tenant for the property. This exemption can last for up to three months, and can be extended in certain circumstances.
Property owners can also take steps to mitigate the impact of business rates on unoccupied premises by exploring other potential uses for the property. For example, they could consider temporary uses such as pop-up shops or art galleries, which can generate income while the property is vacant.
In some cases, property owners may also be able to apply for relief from the rates charge if the property is undergoing major repair works or is otherwise unsuitable for occupation. This relief can reduce the amount of rates payable on the property, providing some financial relief to the owner.
Overall, the impact of business rates on unoccupied premises can be significant for property owners. The introduction of the Empty Property Rate scheme has created a financial burden for those who are unable to find tenants for their premises, and the rates charge can exceed the rental income that the property would generate if it were occupied.
However, there are steps that property owners can take to reduce the impact of business rates on unoccupied premises, such as applying for exemptions or relief from the rates charge, and exploring alternative uses for the property. By taking these steps, property owners can mitigate the financial burden of business rates and work towards bringing their premises back into productive use.