When it comes to running a business, there are numerous expenses that can eat into profits. From rent and utilities to payroll and inventory costs, there are a plethora of financial obligations that business owners must manage. One such cost that can often catch business owners by surprise is void business rates, also known as empty property rates.
void business rates are a type of tax that commercial property owners must pay on properties that are unoccupied. These rates were introduced by the government as a means of discouraging property owners from leaving properties vacant for extended periods of time. The idea behind void business rates is to incentivize property owners to either rent out their vacant properties or sell them to someone who will put them to use.
Void business rates are charged at the same rate as normal business rates. In England and Wales, the standard business rates multiplier for the 2021-2022 tax year is 51.2p. However, properties that have been empty for three months or more are subject to a 100% surcharge, effectively doubling the amount that property owners must pay. This surcharge is intended to encourage property owners to act quickly to find a tenant or buyer for their empty properties.
It’s important for business owners to be aware of void business rates, as failing to pay them can result in significant financial penalties. Property owners who do not pay their void business rates can face fines and legal action from the local council. In some cases, the council may even take possession of the property in order to recoup the unpaid rates.
There are, however, some exemptions to void business rates. Properties that are exempt from business rates in general are also exempt from void business rates. This includes certain types of properties such as agricultural buildings, fish farms, and buildings used for training and welfare purposes. Additionally, properties that have a rateable value of less than £2,900 are exempt from void business rates for three months, rather than the standard three-month exemption.
Property owners can also apply for relief from void business rates in certain circumstances. For example, if a property is being refurbished or undergoing repairs, the property owner may be able to claim relief for up to 12 months. Property owners can also apply for relief if they are actively seeking a tenant for the property but have not been able to find one. It’s important for property owners to be proactive in seeking relief from void business rates, as failure to do so can result in significant financial losses.
One of the biggest challenges that property owners face when it comes to void business rates is the financial burden of paying rates on properties that are not generating any income. This can be particularly difficult for small business owners or those who own multiple properties. In some cases, void business rates can even be a deciding factor in whether a business is able to survive or not.
There are a few strategies that property owners can use to mitigate the impact of void business rates. One option is to try to negotiate a reduction in rates with the local council. Property owners can also consider ways to generate income from their empty properties, such as renting out space for temporary events or pop-up shops. Another option is to explore selling the property to someone who can put it to use and avoid paying void business rates altogether.
In conclusion, void business rates are an important consideration for property owners who have empty commercial properties. Understanding the implications of void business rates and taking proactive steps to mitigate their impact can help property owners avoid financial losses and potential legal issues. By being aware of the regulations surrounding void business rates and exploring options for relief, property owners can better manage this cost and keep their businesses running smoothly.