Business rates are a tax that businesses in the UK are required to pay on their commercial property. These rates are used to fund local services, such as schools and rubbish collection. However, when a property is left empty, business rates can become a burden for property owners. In this article, we will delve into the implications of business rates on empty property.
Empty property is a growing issue in the UK, with an estimated 250,000 commercial properties sitting vacant across the country. When a property is empty, it is still subject to business rates, which can be a significant financial strain for property owners. Business rates are typically calculated based on the rateable value of a property, which is determined by the government’s Valuation Office Agency.
The rateable value is an estimate of how much a property could be rented for on the open market. Business rates are then calculated by multiplying the rateable value by the national non-domestic multiplier, which is set by the government each year. This means that property owners can be left with a hefty bill to pay, even if their property is not generating any income.
There are a few exemptions and reliefs available for empty property owners when it comes to business rates. For example, if a property is undergoing major repairs or structural changes, owners may be able to claim an exemption from business rates for a set period of time. Additionally, some properties may qualify for small business rate relief, which can provide a discount on the amount of business rates owed.
Despite these exemptions and reliefs, empty property owners still face a significant financial burden when it comes to business rates. This can discourage property owners from investing in vacant properties or undertaking much-needed renovations. The result is a growing number of empty properties that sit unused and deteriorating, which can have a negative impact on local communities and economies.
In recent years, the government has made some changes to the business rates system in an effort to address the issue of empty property. In 2021, the government announced a temporary increase in the small business rate relief for empty properties. This change was intended to provide additional support to businesses that were struggling due to the economic impact of the COVID-19 pandemic.
Additionally, the government has introduced new measures to encourage property owners to bring their empty properties back into use. For example, property owners can now claim a three-month exemption from business rates when they bring a property back into use after it has been empty for at least six months. This is designed to incentivize property owners to actively seek tenants for their vacant properties.
While these measures are a step in the right direction, many property owners argue that they do not go far enough in addressing the issue of business rates on empty property. Some have called for a complete overhaul of the business rates system, including a reassessment of how rates are calculated and a reduction in overall rates for empty properties.
In conclusion, business rates on empty property can be a significant financial burden for property owners. Despite some exemptions and reliefs that are available, many property owners still struggle to pay the hefty bills associated with empty properties. The government has introduced some measures to address the issue, but more needs to be done to incentivize property owners to bring their empty properties back into use. Only with comprehensive reform of the business rates system can we truly tackle the issue of empty property in the UK.