Unoccupied business rates, or sometimes referred to as empty property rates, can be a significant financial burden for business owners and landlords. In the UK, businesses are required to pay business rates on commercial properties that are unoccupied. These rates are set by the local council and are used to fund local services such as schools, roads, and waste management.
The concept of unoccupied business rates was introduced to incentivize property owners to bring vacant properties back into use. By imposing a financial penalty on empty properties, the government aims to prevent properties from sitting empty for extended periods of time.
However, the issue of unoccupied business rates can be complex and confusing for many business owners and landlords. In this article, we will explore what unoccupied business rates are, who is liable to pay them, how they are calculated, and what steps businesses can take to minimize the impact of unoccupied business rates.
Who is Liable to Pay unoccupied business rates?
Business rates are typically paid by the person or entity that occupies a commercial property. However, in the case of unoccupied properties, the owner of the property is usually liable to pay the unoccupied business rates. This includes landlords who own vacant commercial properties as well as businesses that own their own premises.
It is worth noting that there are certain exemptions and reliefs available for unoccupied properties. For example, properties that are newly built or undergoing major renovations may be exempt from paying unoccupied business rates for a certain period of time. It is important for property owners to familiarize themselves with these exemptions and reliefs to avoid paying unnecessary rates.
How are unoccupied business rates Calculated?
Unoccupied business rates are calculated based on the rateable value of the property. The rateable value is assessed by the Valuation Office Agency (VOA) and represents the rental value of the property as determined by the local council. The actual amount of unoccupied business rates payable will vary depending on the rateable value of the property and the local council’s multiplier.
The multiplier is set by the government and is used to calculate the amount of business rates payable. For unoccupied properties, the multiplier is typically higher than the standard business rates multiplier to incentivize property owners to bring vacant properties back into use.
For example, if a property has a rateable value of £20,000 and the multiplier is set at 0.49, the unoccupied business rates payable would be £9,800 per year (£20,000 x 0.49).
Minimizing the Impact of unoccupied business rates
There are several steps that businesses and landlords can take to minimize the impact of unoccupied business rates. One option is to consider applying for the various exemptions and reliefs that are available for unoccupied properties. For example, properties that are undergoing major renovations or are newly built may be eligible for relief from unoccupied business rates for a certain period of time.
Another option is to consider leasing or subletting the property to another business. By bringing in a tenant, property owners can avoid paying unoccupied business rates and generate rental income at the same time. However, it is important to carefully consider the terms of the lease agreement to ensure that the property is not occupied for the sole purpose of avoiding unoccupied business rates.
Additionally, property owners may also consider applying for temporary or pop-up uses for the property. By temporarily using the property for events, exhibitions, or other purposes, property owners may be able to qualify for relief from unoccupied business rates. This can be a creative way to generate income from the property while avoiding the financial burden of unoccupied business rates.
In conclusion, unoccupied business rates can be a significant financial burden for businesses and landlords. Understanding who is liable to pay unoccupied business rates, how they are calculated, and what steps can be taken to minimize their impact is crucial for property owners. By exploring the exemptions, reliefs, and alternative uses available, businesses can navigate the complexities of unoccupied business rates and mitigate their financial impact.