Business rates are a tax that is paid by businesses on non-domestic properties, such as shops, offices, and warehouses. These rates are charged by the local council and are used to fund local services and infrastructure. However, businesses that own unoccupied premises also have to pay business rates on those properties, which can be a significant financial burden. In this article, we will explore the implications of business rates on unoccupied premises and discuss the challenges that businesses face in managing this expense.
When a property becomes unoccupied, whether due to relocation, renovation, or simply being unable to find tenants, the owner is still liable to pay business rates on that property. This is because business rates are based on the rateable value of the property, which is an estimate of its open market rental value. The rateable value is assessed by the Valuation Office Agency (VOA) and is used to calculate the amount of business rates that are due.
The government has recognized the challenges that businesses face in paying business rates on unoccupied premises, especially during times of economic uncertainty. As a result, they have introduced a number of relief schemes to help alleviate this financial burden. For example, small businesses with a rateable value of less than £12,000 are eligible for small business rate relief, which can reduce the amount of business rates that are due. There is also a temporary relief scheme for unoccupied properties, which provides a 100% discount on business rates for the first three months that a property is empty.
Despite these relief schemes, paying business rates on unoccupied premises can still be a significant expense for businesses. This is especially true for larger properties with higher rateable values, which can incur hefty business rates bills even when they are empty. For businesses that are struggling financially, paying business rates on unoccupied premises can put additional strain on their cash flow and make it harder for them to survive.
One of the biggest challenges that businesses face in managing business rates on unoccupied premises is the lack of control that they have over the rateable value of their property. The rateable value is determined by the VOA and is based on a number of factors, such as the size, location, and condition of the property. This means that businesses have limited ability to influence the amount of business rates that they have to pay, even if the property is unoccupied.
In some cases, businesses may be able to appeal the rateable value of their property if they believe that it is too high. However, the appeals process can be complex and time-consuming, and there is no guarantee that the rateable value will be reduced. This can leave businesses in a difficult position, as they are still liable to pay business rates at the current rateable value while their appeal is being considered.
Another challenge that businesses face in managing business rates on unoccupied premises is the impact that it can have on their ability to attract tenants. Prospective tenants may be put off by the prospect of having to pay business rates on top of their rent, especially if the property has a high rateable value. This can make it harder for businesses to find new tenants and generate income from their unoccupied premises.
In conclusion, business rates on unoccupied premises can be a significant financial burden for businesses, especially during times of economic uncertainty. While the government has introduced relief schemes to help alleviate this expense, paying business rates on empty properties can still pose challenges for businesses. From the lack of control over the rateable value to the impact on attracting tenants, businesses face a range of difficulties in managing this expense. As such, it is important for businesses to carefully consider the implications of business rates on unoccupied premises and explore all available options for reducing this financial burden.