Business rates are a tax that is levied on non-domestic properties, including shops, offices, warehouses, and factories. The amount of business rates that a property owner must pay is determined by the rateable value of the property, as well as the multiplier set by the government. However, many property owners are not aware that they may still be liable to pay business rates on unoccupied premises.
When a property becomes unoccupied, the owner is often relieved of the burden of paying rent to a tenant. However, this does not mean that they are also relieved of the obligation to pay business rates. In fact, unoccupied properties are still liable for business rates, albeit at a reduced rate.
Under current regulations, properties that have been unoccupied for more than three months are subject to 100% business rates. This means that the property owner must pay the full amount of business rates that would normally be due if the property were occupied. This can be a significant financial burden for property owners, especially if they are struggling to find new tenants for their premises.
In an effort to incentivize property owners to bring their unoccupied premises back into use, the government has introduced a scheme that offers a temporary exemption on business rates for certain types of properties. This scheme, known as the Empty Property Rate Relief, allows property owners to claim relief on their business rates for a set period of time after the property becomes unoccupied.
To qualify for Empty Property Rate Relief, the property must be unoccupied for a minimum of three months and not be capable of occupation due to structural changes or repairs. The relief period varies depending on the type of property, with industrial properties eligible for 6 months of relief, and all other types of properties eligible for 3 months of relief.
While Empty Property Rate Relief provides some relief to property owners, it is important to note that the relief is only temporary. Once the relief period expires, the property owner will be required to pay the full amount of business rates on the unoccupied premises. This can come as a shock to many property owners who may not have factored in the cost of business rates when planning for the future of their vacant property.
In some cases, property owners may be able to apply for discretionary rate relief from the local council. This type of relief is granted on a case-by-case basis and is typically awarded to properties that are undergoing major structural changes or repairs. However, discretionary rate relief is not guaranteed and property owners should not rely on it as a means to avoid paying business rates on unoccupied premises.
Another option for property owners facing high business rates on unoccupied premises is to consider leasing the property to a charity or not-for-profit organization. Properties that are occupied by charities are eligible for 80% mandatory relief on business rates, which can significantly reduce the financial burden on property owners. This can be a win-win situation for both the property owner and the charity, as the property owner can avoid paying full business rates while the charity benefits from a reduced rate for their premises.
In conclusion, business rates on unoccupied premises can be a major financial burden for property owners. It is important for property owners to be aware of their obligations when it comes to paying business rates on unoccupied premises, and to explore all available options for relief. Empty Property Rate Relief, discretionary rate relief, and leasing to charities are all potential solutions that property owners can consider to help alleviate the cost of business rates on unoccupied premises.