Business rates can be a significant financial burden for property owners, especially when their properties sit empty. Whether you are a small business owner or a commercial property investor, avoiding business rates on vacant properties can help you save money and maximize your profits. In this article, we will discuss some effective strategies to help you avoid paying business rates on empty property.
Understanding Business Rates
Before we delve into ways to avoid business rates on empty property, let’s first understand what business rates are. Business rates are a tax that commercial property owners in the UK have to pay to their local council. The amount of business rates payable is based on the rateable value of the property, which is determined by the Valuation Office Agency (VOA).
Business rates are typically charged on non-domestic properties, including shops, offices, warehouses, and factories. However, these rates can also apply to empty properties, which can be a significant financial burden for property owners, especially when the property remains vacant for an extended period.
Strategies to Avoid Business Rates on Empty Property
Fortunately, there are several strategies that property owners can employ to avoid paying business rates on empty property. Here are some effective ways to minimize or eliminate these costs:
1. Temporary Exemption
One of the most common ways to avoid business rates on empty property is by taking advantage of the temporary exemption period. In England, most non-domestic properties are exempt from business rates for the first three months after becoming empty. This exemption period allows property owners some time to find tenants or buyers for their properties without incurring business rates costs.
It’s essential to keep in mind that this three-month exemption period resets every time the property becomes occupied for a short period, so be strategic in how you manage tenant turnovers to maximize this exemption period.
2. Small Business Rate Relief
If you own a small business property that has been empty for a long time, you may qualify for small business rate relief. This relief scheme is designed to help small business owners reduce the amount of business rates they have to pay. Depending on the rateable value of your property, you may be eligible for discounts of up to 100%.
To qualify for small business rate relief, your property must have a rateable value of less than £15,000 in England. It’s worth exploring this option if you own a small business property that has been empty for an extended period, as it can help you save a significant amount of money on business rates.
3. Property Development
Another effective strategy to avoid business rates on empty property is by starting a property development project. If you plan to refurbish or redevelop your vacant property, you may be eligible for an exemption from business rates during the construction period.
The government offers a scheme called the Empty Property Relief (EPR), which provides a full exemption from business rates for non-domestic properties undergoing renovation or reconstruction. This exemption can last for up to 18 months, depending on the size and type of the development project.
By embarking on a property development project, you can not only avoid paying business rates on your empty property but also increase its value and attract new tenants or buyers in the future.
4. Charity Use
If you own an empty property that is being used for charitable purposes, you may qualify for an exemption from business rates. Properties that are occupied by registered charities or community amateur sports clubs (CASCs) may be eligible for 80% business rates relief.
Under the Charities and Community Amateur Sports Clubs (Relief) Act 2012, properties used for charitable purposes can benefit from substantial discounts on business rates. This exemption can help you minimize the financial burden of owning an empty property while supporting a good cause.
Conclusion
avoiding business rates on empty property is essential for property owners looking to save money and maximize their profits. By taking advantage of temporary exemptions, small business rate relief, property development projects, and charitable use exemptions, you can significantly reduce or eliminate business rates costs on your vacant properties.
Remember to consult with a professional advisor or local authority to determine the best strategy for avoiding business rates on your empty property. With careful planning and strategic decision-making, you can minimize the financial burden of business rates and make the most of your investment in commercial real estate.