When it comes to owning and operating commercial property, one of the biggest financial burdens that business owners face is the payment of business rates. These rates are taxes levied on non-residential properties by local authorities in the United Kingdom. They are calculated based on the rateable value of the property and can add up to a significant annual expense.
However, there are ways to mitigate these costs, especially when it comes to empty properties. Business owners who find themselves with vacant commercial buildings can take steps to avoid paying business rates on these properties. Here are some strategies to consider:
1. Temporary Occupation
One way to avoid business rates on an empty property is to allow for temporary occupation. By renting out the space on a short-term basis, even for just a few weeks or months, the property is considered occupied and therefore exempt from business rates. This strategy can be particularly effective for landlords who are actively looking for long-term tenants but want to avoid paying rates on an empty building in the meantime.
2. Development or Refurbishment
Another option for avoiding business rates on empty property is to demonstrate that the property is undergoing development or refurbishment. By showing that the building is being actively worked on and is not suitable for occupation, business owners can apply for a temporary exemption from business rates. This strategy may require submitting detailed plans of the renovation work and providing evidence of progress to the local authorities.
3. Charitable Occupancy
Charities and non-profit organizations are exempt from paying business rates on the properties they occupy. By temporarily leasing an empty property to a charity, business owners can effectively avoid business rates while also benefiting a good cause. This arrangement can be a win-win for both parties, as the charity gains access to much-needed space at a reduced cost, while the property owner saves money on business rates.
4. Small Business Rate Relief
In some cases, small business owners may qualify for rate relief on their empty properties. The Small Business Rate Relief scheme offers discounts on business rates for eligible businesses with a rateable value below a certain threshold. By applying for this relief, small business owners can reduce the financial burden of empty property rates and potentially save thousands of pounds each year.
5. Vacant Property Relief
For properties that have been empty for an extended period of time, business owners may be eligible for Vacant Property Relief. This relief provides a 100% exemption from business rates for the first three months that a property is empty. After this initial period, the property owner may be able to apply for further relief, depending on the circumstances. It is important to note that eligibility criteria and application processes vary by region, so it is essential to check with the local council for specific guidelines.
6. Use of the Property for Storage
If an empty property is being used for storage purposes only, rather than for business activities, it may be possible to avoid paying business rates. Storage properties are often classified differently than commercial properties and may be eligible for lower rates or exemptions altogether. Business owners should check with their local council to see if their storage use qualifies for a reduced rate.
In conclusion, avoiding business rates on empty property is possible with careful planning and strategic decision-making. By exploring options such as temporary occupation, development or refurbishment, charitable occupancy, small business rate relief, vacant property relief, and storage use, business owners can minimize the financial impact of owning vacant commercial properties. Consulting with a financial advisor or property expert can also help business owners navigate the complex regulations surrounding business rates and find the best solutions for their specific circumstances. With the right approach, business owners can effectively manage their property costs and maximize their profits in the long run.