Business rates on vacant property, commonly referred to as “vacant rates,” can be a significant financial burden for property owners. In this article, we will explore what business rates on vacant property are, how they are calculated, and provide some tips on how you can minimize the impact on your bottom line.
What are business rates vacant property?
Business rates are taxes that are charged on most non-domestic properties in the UK. These rates are calculated based on the rateable value of the property and are used to fund local services such as schools, roads, and refuse collection. When a property becomes vacant, the responsibility for paying business rates falls onto the property owner.
Vacant rates are essentially the same as business rates, but are charged at a different rate. The government introduced vacant rates to discourage property owners from leaving their properties empty for extended periods of time. The idea is to incentivize property owners to make productive use of their properties or potentially face a financial penalty.
How are business rates vacant property Calculated?
Business rates on vacant property are calculated at 50% of the normal business rates bill. This means that if you have a property with a rateable value of £10,000, you would typically be liable for business rates of £5,000. However, if the property becomes vacant, you would be required to pay vacant rates of £2,500.
It is important to note that there are some exemptions and reliefs available for certain types of properties. For example, listed buildings and properties with a rateable value of less than £2,600 are exempt from paying business rates on vacant property. Additionally, if a property is undergoing major structural repairs or is being redeveloped, you may be eligible for a temporary exemption from vacant rates.
Tips for Minimizing the Impact of business rates vacant property
While paying business rates on vacant property can be a financial burden, there are some strategies that property owners can employ to minimize the impact on their bottom line. Here are a few tips to help you navigate the world of vacant rates:
1. Utilize Empty Property Relief: If your property has been empty for more than three months, you may be eligible for empty property relief. This relief provides a 100% exemption on business rates for the first three months that a property is vacant, followed by a 50% discount for the subsequent periods. Be sure to check with your local council to see if you qualify for this relief.
2. Explore Small Business Rate Relief: If you own a small business property with a rateable value of less than £15,000, you may be eligible for small business rate relief. This relief can provide significant savings on your business rates bill and help offset the costs of vacant rates.
3. Consider Redevelopment Options: Rather than leaving your property vacant and incurring vacant rates, consider exploring redevelopment options. By repurposing your property for a new use, you may be able to attract tenants and generate income, thereby reducing the impact of business rates on your bottom line.
4. Keep Detailed Records: It is important to keep detailed records of the reasons why your property is vacant. Whether it is undergoing renovation, awaiting new tenants, or for any other valid reason, having this documentation on hand can help you justify your eligibility for any available exemptions or reliefs.
In conclusion, business rates on vacant property can be a financial challenge for property owners, but with careful planning and strategic thinking, it is possible to minimize the impact on your bottom line. By understanding how vacant rates are calculated, exploring available exemptions and reliefs, and considering redevelopment options, you can better navigate the world of business rates on vacant property and ensure that you are not paying more than necessary.