When it comes to owning or leasing a commercial property, one important aspect that business owners need to be aware of is business rates. Business rates are taxes that are levied on most non-domestic properties, including shops, offices, warehouses, and factories. These rates are based on the rateable value of a property, which is determined by the Valuation Office Agency (VOA). However, what many business owners may not be aware of is the concept of void business rates.
void business rates refer to the rates that are payable on a commercial property that is empty. In simple terms, if you own or lease a business property that is vacant, you may still be required to pay business rates on that property. This can come as a surprise to many business owners, as they may assume that they would not have to pay rates on a property that is not generating any income. However, void business rates are a reality that business owners must be prepared for.
There are a few key things that business owners should know about void business rates. Firstly, the rules regarding void business rates vary depending on the location of the property. In England, for example, business owners are generally entitled to a three-month exemption from business rates for empty properties. After this three-month period, full business rates must be paid on the property, unless the property qualifies for a further exemption.
In Scotland, on the other hand, business owners are entitled to a 100% relief on business rates for the first three months that a property is empty. After this initial three-month period, a property owner will be required to pay 10% of the business rates. This percentage increases by 10% each month thereafter, meaning that after 10 months, the property owner will be required to pay the full rate.
In addition to the variation in rules between different regions, there are also specific criteria that must be met in order for a property to qualify for exemptions or relief from void business rates. For example, properties that are undergoing major renovation or reconstruction works may be eligible for an exemption from business rates, as long as the property is being brought back into use. Similarly, properties that are listed buildings may also be eligible for relief from business rates, as the costs of maintaining and preserving such buildings can be significant.
It is also worth noting that there are certain types of properties that are exempt from business rates entirely, regardless of whether they are occupied or empty. These properties include agricultural land and buildings, buildings used for training or welfare, and certain types of non-profit organizations. However, it is important for business owners to be aware of the specific rules and regulations that apply to their particular circumstances, as failure to pay void business rates can result in hefty fines and penalties.
One of the key challenges for business owners when it comes to void business rates is the financial burden that they can place on a business. Paying business rates on a property that is not generating any income can be a significant expense, particularly for small businesses or startups that may already be struggling financially. In some cases, business owners may be forced to sell or give up their property in order to avoid the costs associated with void business rates.
In order to mitigate the impact of void business rates, business owners may want to consider leasing out their property on a temporary basis. By finding a short-term tenant or subletting the property, business owners may be able to generate some income from the property and offset the costs of the void business rates. Alternatively, business owners may want to explore the possibility of negotiating with their local council for relief or exemptions from void business rates, particularly if they can demonstrate that they are actively trying to bring the property back into use.
Overall, void business rates are an important consideration for business owners who own or lease commercial properties. Understanding the rules and regulations surrounding void business rates, as well as exploring potential strategies for mitigating their impact, can help business owners navigate this complex aspect of property ownership. By being aware of their obligations and exploring potential solutions, business owners can ensure that they are not caught off guard by void business rates and can effectively manage their property portfolios.