Understanding Business Rates On Unoccupied Premises

Business rates are a tax imposed by the local government on non-residential properties, such as shops, offices, and warehouses. The amount of business rates to be paid by the property owner is based on the rateable value of the property, which is set by the Valuation Office Agency (VOA). However, when a property becomes unoccupied, the rules regarding business rates change. In this article, we will explore the implications of unoccupied premises on business rates and how property owners can navigate this issue.

When a commercial property becomes unoccupied, the property owner is still liable to pay business rates. This can often come as a shock to property owners who assume that they would be exempt from paying business rates on a property that is not generating any income. The reasoning behind this is that the local government still incurs costs in maintaining services for unoccupied properties, such as security and waste removal. Therefore, the principle is that the property owner should still contribute towards these costs through business rates.

Property owners may be eligible for a period of empty property relief, which provides a temporary exemption from paying business rates on unoccupied premises. In England, the initial period of empty property relief is three months for commercial properties, after which the property owner will be required to pay full business rates. Some local authorities may offer extended empty property relief for certain types of properties, such as industrial buildings or listed buildings. It is important for property owners to check with their local council to see if they are eligible for any exemptions or relief.

Another option for property owners with unoccupied premises is to consider the possibility of business rates mitigation. This involves taking steps to reduce the rateable value of the property, thereby lowering the amount of business rates that need to be paid. Property owners can challenge the rateable value set by the VOA by providing evidence of factors that may have reduced the value of the property, such as disrepair or a downturn in the local market. It is advisable to seek professional advice when considering business rates mitigation, as it can be a complex process.

Property owners should also be aware of the implications of leaving a property unoccupied for an extended period of time. In England, properties that have been empty for more than two years may be subject to an increase in business rates under the “empty property premium”. This means that the property owner will be required to pay an additional 50% on top of the standard business rates if the property remains unoccupied for an extended period. It is therefore in the best interest of property owners to take proactive steps to either rent out the property or find alternative uses to avoid these additional costs.

In Scotland, the rules regarding business rates on unoccupied premises are slightly different. Properties that are unoccupied and unfurnished are eligible for an exemption from paying business rates for the first three months. After the initial three-month period, the property owner will be required to pay 50% of the standard business rates. It is important for property owners in Scotland to be aware of these regulations and to take the necessary steps to minimize their business rates liability on unoccupied premises.

Overall, it is important for property owners to be aware of the implications of unoccupied premises on business rates and to take proactive measures to minimize their costs. This may include exploring options for empty property relief, business rates mitigation, or finding alternative uses for the property. By staying informed and seeking professional advice when necessary, property owners can navigate the complex landscape of business rates on unoccupied premises and ensure that they are not paying more than necessary.