When it comes to running a business, there are numerous costs that business owners need to factor in. From rent and utilities to employee salaries and marketing expenses, the list can seem never-ending. One cost that may catch some business owners off guard is void business rates. These rates, also known as empty property rates, can have a significant impact on a company’s finances. In this article, we will delve into what void business rates are, why they exist, and how businesses can mitigate their impact.
void business rates are a type of tax that is imposed on commercial properties that are empty or unused. Under normal circumstances, non-domestic properties are subject to business rates, which are used to fund local services such as schools, roads, and waste collection. However, when a property becomes vacant, the owner may become liable to pay void business rates on the property. The government introduced this tax as a way to discourage property owners from leaving their properties empty for extended periods.
Business rates are based on the rateable value of a property, which is determined by the Valuation Office Agency (VOA). The rateable value represents the rental value of a property on the open market as of a certain date. This value is then used to calculate the amount of business rates that a property owner is required to pay. The amount of void business rates a property owner must pay is usually around 50% of the normal business rates bill. However, there are certain exemptions and reliefs available, which we will discuss later in this article.
There are several reasons why a property may become vacant and, therefore, subject to void business rates. For example, a business may move to a new location, leaving their old premises empty. Alternatively, a property owner may be in the process of renovating or redeveloping a property, resulting in it being temporarily vacant. In some cases, a property may simply be unable to find a tenant, leading to it remaining empty for an extended period. Regardless of the reason, property owners need to be aware of the implications of leaving their properties empty and the potential costs involved.
Mitigating the impact of void business rates is essential for property owners looking to minimize their financial burden. One way to do this is to take advantage of the various exemptions and reliefs available. For example, properties that have been empty for less than three months are exempt from void business rates. Additionally, properties with a rateable value of less than £2,900 are eligible for 100% relief, meaning they do not have to pay any void business rates. Property owners should carefully review the criteria for these exemptions and reliefs to ensure they are making the most of any potential savings.
Another way to mitigate the impact of void business rates is to explore options for temporarily occupying the property. This could involve renting out the property on a short-term basis or using it for other purposes such as storage or events. By occupying the property even temporarily, property owners can avoid or reduce the void business rates they are required to pay. However, it is essential to be aware of any restrictions or regulations that may apply to these temporary uses of the property.
In conclusion, void business rates are a cost that property owners need to be mindful of when managing their commercial properties. Understanding why void business rates exist and how they are calculated is essential for minimizing their impact on a business’s finances. By exploring exemptions, reliefs, and temporary occupancy options, property owners can effectively manage void business rates and ensure they are not paying more than necessary. With careful planning and consideration, businesses can navigate the challenges of void business rates and protect their bottom line.