Business rates are a significant concern for business owners, particularly when it comes to empty shops. Empty shops not only contribute to declining footfall and the overall appearance of a city or town center, but they also come with the added burden of business rates. In this article, we will explore the impact of business rates on empty shops and discuss potential solutions to address this issue.
Business rates, also known as non-domestic rates, are a form of taxation imposed on businesses that operate in non-residential properties. The amount of business rates payable is determined by the rateable value of the property, which is assessed by the Valuation Office Agency. For vacant properties, business rates are still payable at a reduced rate known as the empty property rate.
The empty property rate is typically set at 50% of the full business rates bill for the first three months that a property is empty. After this initial period, the rateable value increases to 100%, meaning that businesses must pay the full business rates amount for each subsequent month that the property remains unoccupied.
This presents a significant financial burden for business owners who are already struggling to attract tenants or buyers for their empty shops. The additional cost of business rates can make it even more challenging for landlords to find suitable tenants or to invest in improving the property to make it more attractive to potential occupants.
Furthermore, the presence of empty shops in a town center can have a negative impact on the local economy as a whole. Empty shops detract from the overall appearance of the area, leading to a decline in footfall and consumer spending. This, in turn, can result in a domino effect, with neighboring businesses also experiencing a decrease in revenue as a result of reduced foot traffic.
In some cases, landlords may deliberately leave properties empty in order to avoid paying business rates altogether. This practice, known as “rate avoidance,” is often criticized for contributing to the decline of town centers and hindering economic growth. The government has introduced measures to deter rate avoidance, such as increasing the rateable value of empty properties and imposing penalties on landlords who fail to pay their business rates.
However, it is important to recognize that not all empty shops are the result of rate avoidance. Many business owners are simply unable to find a suitable tenant or buyer for their property, often due to factors beyond their control such as changes in consumer behavior, competition from online retailers, or the economic downturn.
To address the issue of business rates on empty shops, some have called for reforms to the current system. One proposal is to introduce a business rates holiday for empty properties, whereby business owners would be exempt from paying business rates for a certain period of time after their property becomes vacant. This would provide much-needed relief for struggling business owners and incentivize them to invest in their properties to attract tenants or buyers.
Another suggestion is to introduce a system of flexible business rates, whereby the amount payable would be tied to the occupancy status of the property. For example, business owners could pay a reduced rate when their property is empty and then switch to the full rate once it is occupied. This would help to alleviate the financial burden on business owners and encourage them to bring their empty shops back into use.
In conclusion, business rates on empty shops are a significant issue that requires attention and action from policymakers. By reforming the current system and introducing measures to incentivize property owners to bring their empty shops back into use, we can help to revitalize town centers, stimulate economic growth, and support local businesses. It is essential that we work together to find practical solutions to address this issue and ensure a brighter future for our high streets.