When it comes to running a successful business, there are many costs to consider, one of which is business rates. Business rates are levied on non-domestic properties in the UK, including shops, offices, pubs, and warehouses. However, business rates on empty properties can be a significant financial burden on business owners, especially during periods of economic uncertainty or when properties are temporarily vacant.
Fortunately, there are strategies that business owners can employ to avoid or mitigate business rates on empty properties. By understanding the rules and regulations surrounding business rates, businesses can save money and allocate their resources more efficiently. Here are some tips to help avoid business rates on empty property:
1. Temporary occupation
One effective way to avoid paying business rates on an empty property is to find a temporary occupant. By allowing someone to occupy the property for a short period, businesses can benefit from empty property relief. This relief provides a 100% exemption from business rates for a maximum of three months (six months for industrial properties). This strategy can be particularly useful for landlords looking for temporary tenants or businesses seeking to share office space with others.
2. Apply for exemptions and reliefs
Business owners should be aware of the various exemptions and reliefs available to them when it comes to business rates on empty properties. For example, properties with a rateable value below £2,900 are eligible for small business rate relief, which can reduce the amount of business rates payable. Additionally, properties undergoing major refurbishment or structural repairs may qualify for an exemption from business rates for a temporary period.
3. Use Charitable or Community Interest Companies
Another strategy to avoid business rates on empty property is to lease the property to a charitable or Community Interest Company (CIC). These types of organizations are generally exempt from paying business rates on the property they occupy. By leasing the property to a charitable or CIC, business owners can benefit from the exemption while supporting a worthy cause.
4. Seek professional advice
Navigating the complex rules and regulations surrounding business rates can be challenging for business owners. Seeking professional advice from a chartered surveyor, accountant, or business rates specialist can help businesses understand their options and identify the best strategies for avoiding business rates on empty properties. These professionals can provide valuable insights and recommendations tailored to the specific needs and circumstances of the business.
5. Challenge the rateable value
In some cases, business owners may find that the rateable value of their property is inaccurate or outdated, leading to higher business rates than necessary. By challenging the rateable value through the Valuation Office Agency (VOA) or appealing to the Valuation Tribunal, businesses may be able to secure a reduction in their business rates liability. It is essential to have the property professionally assessed to determine its accurate rateable value and make a strong case for a reduction.
6. Consider short-term leases
Instead of leaving a property empty and liable for business rates, business owners can consider offering short-term leases to tenants. By renting out the property on a short-term basis, businesses can generate income while avoiding business rates on the property. Short-term leases can also provide flexibility for businesses that may need the property for future use or development.
7. Keep the property occupied
One of the most effective ways to avoid business rates on empty property is to keep it occupied. Whether by finding tenants, using the property for storage or alternative purposes, or subletting to other businesses, keeping the property in use can help businesses avoid the financial burden of business rates. Additionally, occupied properties are less likely to attract vandalism or deterioration, reducing maintenance costs in the long run.
In conclusion, avoiding business rates on empty property is a common concern for many business owners in the UK. By utilizing strategies such as temporary occupation, applying for exemptions and reliefs, leasing to charitable organizations, seeking professional advice, challenging the rateable value, offering short-term leases, and keeping the property occupied, businesses can mitigate the financial impact of business rates on their bottom line. It is essential for business owners to stay informed about their options and take proactive steps to reduce their business rates liability on empty properties.