When it comes to owning or leasing commercial property, one of the key considerations for any business owner is the impact of business rates on empty commercial property. These rates can have a significant financial impact on businesses, especially if the property remains vacant for an extended period of time. In this article, we will explore the implications of business rates on empty commercial property and provide some guidance on how businesses can navigate this complex issue.
Business rates are a tax on non-domestic properties used for commercial purposes, such as shops, offices, and warehouses. The rates are based on the rateable value of the property, which is determined by the Valuation Office Agency (VOA) in England, the Scottish Assessors Association (SAA) in Scotland, and the Valuation and Lands Agency (VALA) in Northern Ireland.
One of the key challenges for businesses is that business rates are still payable on commercial properties even if they are empty. This means that businesses that own or lease empty commercial property are still liable to pay business rates, regardless of whether the property is generating any income. This can put a significant financial strain on businesses, especially if they are struggling to find tenants or buyers for the property.
For businesses that own multiple commercial properties, the impact of business rates on empty properties can be even more pronounced. Not only do they have to pay business rates on each empty property, but they also have to cover the costs of maintaining and securing the properties while they are vacant. This can eat into their profits and make it more difficult for them to invest in other areas of their business.
So, what can businesses do to mitigate the impact of business rates on empty commercial property? One option is to apply for an exemption or relief from paying business rates on empty properties. In some cases, businesses may be eligible for relief if the property is undergoing repairs or refurbishment, or if they can demonstrate that they are actively seeking tenants or buyers for the property.
Another option is to explore alternative uses for the property while it is vacant. For example, businesses could rent out the property for temporary use as a pop-up shop, event space, or storage facility. This can help generate some income while the property is vacant and reduce the financial burden of paying business rates on an empty property.
Businesses can also consider negotiating with the local council to see if they can arrange a payment plan for the business rates on their empty properties. Some councils may be willing to offer flexibility in payment terms, especially if the business can demonstrate that they are facing financial hardship.
It’s also worth noting that the government has introduced some temporary measures to help businesses cope with the impact of business rates on empty commercial property. For example, the government announced in 2020 that businesses would not have to pay business rates on empty properties for the 2020-2021 tax year in response to the COVID-19 pandemic. While these measures are temporary, they can provide some much-needed relief for businesses during challenging times.
In conclusion, the impact of business rates on empty commercial property can be a significant financial burden for businesses. However, by exploring options for relief, finding alternative uses for the property, and negotiating with the local council, businesses can navigate this complex issue and minimize the impact on their bottom line. With careful planning and proactive management, businesses can overcome the challenges posed by business rates on empty commercial property and emerge stronger on the other side.