Learn How To avoid business rates on empty property, you can apply for exemption or relief through your local council. Here’s what you need to know: business rates can be a significant expense for property owners, especially if the property is vacant.
Table of Contents
However, there are various ways to avoid paying these rates, including applying for exemption or relief. Qualification for these exemptions depends on factors such as the type of property, how long it has been empty, and the owner’s circumstances.
In some cases, certain types of properties, such as agricultural land and some industrial premises, are automatically exempt from business rates when they are empty.
Other owners may qualify for relief of up to 100%, temporarily reducing or eliminating the business rates they owe. By exploring these options and submitting the necessary applications to your local council, you can avoid paying unnecessary business rates on empty properties.
Understanding Business Rates For Empty Property
Business rates for empty properties are often a point of confusion for landlords and business owners alike. It can be challenging to know when and how to pay business rates on empty properties and when you might be exempt. We’ll delve deep into the topic and provide you with a comprehensive guide on how to avoid business rates on empty property.
Definition Of Business Rates For Empty Properties
Business rates are a tax that is charged on non-domestic properties, including empty properties. These rates are payable on most properties that are used for business purposes, such as shops, offices, factories, warehouses, and other commercial buildings. Business rates are levied by local authorities in england, wales and scotland, with northern ireland having a separate system.
How Business Rates Are Calculated For Empty Properties
Business rates for empty properties are usually charged at the full rate. However, there are some instances when you might be eligible for a reduced rate or even exemption. Here’s how to work out your business rates on an empty property:
- You can calculate your empty property rates by contacting your local council or using their online calculator.
- The rateable value of your property (rv) is determined by the valuation office agency (voa). This is the estimated rental value of the property on a specific date.
- The business rate multiplier (brm) is set by the government each year and represents the amount you pay for every £1 of valuation.
- Multiply the rv by the brm to get the amount of business rates you need to pay.
Time Limits For Properties To Be Exempt From Business Rates
Some empty properties are exempt from business rates for a specific amount of time. Here are the time limits for different types of properties:
- Properties owned by charities are exempt for an unlimited period.
- Industrial premises are exempt for six months.
- Listed buildings are exempt for twelve months.
- Properties with an rv of less than £2,899 are exempt for an unlimited period.
Linking Business Rates To Council Tax
It can be confusing to understand how business rates and council tax are linked. Here’s what you need to know:
- Council tax is a tax on domestic properties, while business rates are a tax on non-domestic properties.
- If a property is used for business purposes and also has living accommodation, it may be subject to both business rates and council tax.
- The voa determines the property’s rv for business rates and council tax purposes.
- There are different discounts and exemptions available for council tax, which are not available for business rates.
Understanding business rates for empty properties can be challenging. However, by familiarising yourself with the rules and regulations, you can avoid business rates on empty property or be eligible for a reduced rate or exemption. Remember to check with your local council for more information.
Legal Ways To Avoid Business Rates For Empty Property
Did you know that leaving your business premises empty could result in paying business rates? Fortunately, there are several legal ways to avoid paying business rates.
Occupying The Property For Charitable Purposes
Some charitable organizations may qualify for relief from business rates if they occupy empty properties. Here are the key points to consider:
- The occupation must be for charitable purposes rather than for financial gain.
- The property must be wholly or mainly occupied for the charitable use.
- The charitable organization must be registered with the charity commission.
Leasing The Property To Community Interest Organizations
Leasing your empty property to community interest companies (cics) may also qualify your property for business rates relief. Here are the key details to keep in mind:
- Cics must benefit the community or part of it.
- The property must be held for charitable purposes.
- The local council has the authority to determine whether the organization qualifies for rates relief.
Registering The Property As Exempt
Another option for avoiding business rates on empty properties is to apply for exemption. Here are the key points to remember:
- Exemptions are generally granted to properties with a rateable value below a certain threshold.
- Vacant properties in rural areas may also qualify for exemptions.
- Exemption periods may vary depending on the property’s location and intended use.
Using The Small Business Rate Relief Scheme
Small business rate relief is also available for eligible businesses. Here are some essential details:
- Businesses with a rateable value of up to £15,000 may qualify for relief.
- Properties with a rateable value of up to £12,000 may be fully exempt from business rates.
- Businesses with a rateable value between £12,001 and £15,000 may qualify for partial relief.
The Temporary Exemption Period For Newly Built Properties
Newly built properties may also benefit from temporary exemptions. Here are the key details:
- Newly built properties may be exempt from business rates for up to three months.
- The exemption period may differ depending on the property’s use and location.
- The local council must be informed of the property’s completion to qualify for exemption.
By utilizing these legal ways, you can avoid paying business rates on your empty property. Just remember to research which option is most suitable for your property type and location.
Creative Ways To Save On Business Rates For Empty Property
Are you the owner of an empty commercial property? If so, you are likely aware of the hefty business rates that come with it. The good news is that there are several creative ways to save on these rates while your property is vacant.
These methods include short-term leases to short-term tenants, removing furniture and fittings to avoid classification as a commercial property, repurposing the property for temporary usage, and using it as storage.
Short-Term Leases To Short-Term Tenants
- Short-term leases to short-term tenants is an excellent way to save on business rates for an empty property.
- You can lease the property to new tenants on short-term agreements, e.g., three to six months.
- A short-term lease means that the property is not vacant, and therefore it is not subject to full business rates.
- Short-term leases can also benefit the tenants as they have access to a property for a shorter period, which may suit their business needs.
Removing Furniture And Fittings To Avoid Classification As A Commercial Property
- Removing furniture and fittings to avoid classification as a commercial property is another creative way to save on business rates for empty property.
- An empty commercial property is generally classified as a commercial property, but if the property is bare and does not have any furniture or fittings, it will be classified as a non-domestic property and hence will have lower business rates.
- If the property is not completely bare, it is best to remove as much furniture and fittings as possible to reduce the business rates.
Repurposing The Property For Temporary Usage
- Repurposing the property for temporary usage is another excellent way to save on business rates for empty property.
- Consider renting out the space for pop-up events such as art exhibitions, food markets, or flea markets that only last a few days or weeks.
- It will keep the property occupied, and you can earn some income to offset the costs of business rates.
- You can also use the property for temporary office space or storage, which will help to avoid higher business rates.
Using The Property As Storage While It’S Vacant
- Using the property as storage while it is vacant is another creative way to save on business rates for an empty property.
- You can utilize the space for storage of goods, materials, and equipment. However, you must make sure that the property is secure and that you have the right insurance cover.
- Using a commercial property for storage will attract lower business rates compared to using it for other commercial purposes.
Owning an empty commercial property does not always have to be a financial burden. By utilizing these creative ways to save on business rates, you can turn your empty property into an income generator. These methods are legal, and you can use one or more of them to suit your property and business needs.
The Risks Of Non-Compliance
Business rates on empty property can be a major stress for any owner that needs to be managed so that they do not end up paying fines or facing legal action. Here we’ll cover the risks associated with non-compliance, including fines and legal action for not paying business rates, the importance of consulting with a legal expert, and keeping accurate records of all processes.
Fines And Legal Action For Not Paying Business Rates
- Failing to pay business rates on empty property means you may face fines that increase daily, making it essential to stay vigilant and informed on when your payment is due.
- You may also face legal action from the local authority, which could lead to your property being seized and sold to cover the debt.
- The local authority can also issue bankruptcy protection orders if you are unable to pay your debts, making it harder for you to manage your finances.
The Importance Of Consulting With A Legal Expert
- It’s essential to seek professional legal advice, as it can help you to identify ways of avoiding business rates on empty property and help with compliance.
- Legal experts can guide you through the entire process of understanding how the business rate system works and help you find a way to appeal against rateable values.
- Engaging with a legal expert can also provide you with all the necessary information to avoid penalties associated with non-compliance.
Keeping Accurate Records Of All Processes
- Keeping accurate records can be a good way of tracking business rates on empty property payments and ensuring they are made on time.
- It helps to maintain records of all correspondence with the local authority, including letters and emails, so you can quickly refer to them if needed.
- By keeping accurate records, you can avoid the risk of errors that may impact your ability to manage finances and risk being penalized for non-compliance.
It’s paramount to be aware of the potential risks associated with non-compliance of business rates on empty property. Fines and legal action can be severe and cause significant financial damage to your business. Therefore, seek legal advice, make accurate records, and keep on top of your payments to avoid any issues.
FAQs For How To Avoid Business Rates On Empty Property
Can Business Rates Be Avoided On Empty Properties?
Yes, business rates can be avoided on empty properties for certain periods. After the initial three-month exemption period, some property owners qualify for partial relief, while others are eligible for full exemption for as long as the property remains unoccupied.
How Can I Check The Current Rateable Value Of My Property?
To check your property’s current rateable value, you can use the government’s online tool, called the ‘business rates valuation’. By entering your property’s postcode or address, you can view your current rateable value and any other relevant information.
Are There Any Circumstances Where I Have To Pay Business Rates On Empty Properties?
Yes, some properties may not be eligible for empty property relief, and business rates may still apply. These include properties with a rateable value of less than £2,900 or where the owner is not registered for business rates.
Can I Claim Relief On An Empty Property If It’S Being Used For Storage?
It depends on the type of storage. If the storage is for the owner’s personal belongings, then relief can be claimed. However, if the storage is for business purposes, then the property may not be eligible for relief and business rates may apply.
How Can I Claim Empty Property Relief?
To claim empty property relief, you need to contact your local council and provide them with information about the property and the reasons for it being empty. They will then assess whether you are eligible for relief and inform you of the decision.
It is important to inform the council immediately when the property becomes occupied, as relief may be withdrawn.
After going through this post, it is evident that avoiding business rates on empty property is achievable, and all it takes is a bit of research and planning. From the steps highlighted, it’s easy to see that the key to avoiding unnecessary rates is to remain proactive and keep the authorities informed of any changes in the status of your property.
Remember, the government takes taxation seriously, and ignorance is not an excuse. Therefore, it is essential to stay up-to-date with the latest regulations and seek professional advice where necessary. By following the guidance outlined in this article, you can reduce the burden of paying business rates on your empty property, and in the long term, it might save you thousands of dollars.