When it comes to owning and managing commercial property, one of the key considerations that owners need to keep in mind is the payment of business rates on empty properties. Business rates are a tax that is levied on non-domestic properties, including shops, offices, warehouses, and factories. These rates are essential for local authorities to raise revenue to fund public services and infrastructure projects. However, the rules around business rates on empty properties can be complex and confusing for property owners. In this article, we will delve into the topic of business rates on empty property and provide a comprehensive overview of what property owners need to know.
One of the first things that property owners need to understand is that business rates are charged on most non-domestic properties, even if they are empty. This means that owners of commercial properties such as shops or offices are still liable to pay business rates, even if their properties are vacant and not generating any rental income. In some cases, property owners may be able to claim empty property relief, which provides a discount on the business rates payable on vacant properties. However, there are specific criteria that need to be met in order to qualify for this relief, and property owners need to be aware of these criteria in order to avoid penalties and fines.
The current rules around business rates on empty properties are governed by the Rating (Property in Common Occupation) and Council Tax (Empty Dwellings) Act 2018. Under this legislation, business rates are not payable on a property that is empty for the first three months after it becomes vacant. After the initial three-month period, business rates are payable at a rate of 50% of the full liability for a further three months. This means that property owners are entitled to a 100% discount on business rates for the first three months that their property is empty, followed by a 50% discount for the next three months.
It is important for property owners to keep accurate records of the dates on which their properties became vacant in order to ensure that they are not overcharged on their business rates. Local authorities have the power to impose penalties on property owners who fail to declare that their properties are empty, or who provide inaccurate information about the dates on which their properties became vacant. Penalties can include fines and interest charges, so it is essential for property owners to be diligent when it comes to reporting vacancies to the local council.
In addition to empty property relief, there are other forms of relief available to property owners who are struggling to pay their business rates. For example, small business rate relief is available to businesses that meet certain criteria, such as occupying only one property with a rateable value below a certain threshold. Charitable rate relief is also available to registered charities and community amateur sports clubs that occupy a property for charitable purposes. These forms of relief can provide valuable savings for property owners who are struggling to meet their business rates obligations.
In some cases, property owners may be able to negotiate with the local council to agree on a reduced rate for their business rates. This can be particularly useful for owners of larger properties or portfolios of properties who are facing financial difficulties and are unable to pay the full rates that are due. Local councils have the discretion to offer discounts on business rates in certain circumstances, so it is worth exploring this option if you are struggling to meet your business rates obligations.
Overall, it is essential for property owners to be aware of their obligations when it comes to business rates on empty properties. By understanding the rules and regulations around business rates, property owners can avoid penalties and fines, and ensure that they are paying the correct amount of tax on their properties. Empty property relief and other forms of relief can provide valuable savings for property owners who are struggling to meet their business rates obligations. By staying informed and proactive, property owners can navigate the complexities of business rates on empty properties and ensure that they are complying with their legal obligations.