When it comes to owning commercial property, there are many expenses that property owners must account for, including business rates. Business rates are taxes that are paid on non-residential properties, such as offices, shops, warehouses, and factories. These rates are collected by local authorities and are used to fund local services. One common misconception about business rates is that they are only payable on occupied properties. However, this is not the case. Property owners are also required to pay rates on empty commercial properties, although there are some exemptions and relief options available.
rates payable on empty commercial property, often referred to as empty property rates, can be a significant expense for property owners. In the UK, businesses are required to pay business rates on most non-residential properties, including those that are empty. The rateable value of a property is used to determine the amount of business rates that must be paid. The rateable value is based on the estimated market rental value of the property as of a certain date. For properties that are empty, the rateable value is based on the market rental value of the property as if it were in a state of reasonable repair.
Property owners are generally required to pay full business rates on empty properties for the first three months that the property is empty. After the initial three months, the rateable value of the property is doubled, resulting in a significant increase in the amount of rates payable. This is meant to incentivize property owners to actively market and occupy their properties. However, there are some exemptions and relief options available to property owners who find themselves with empty commercial properties.
One common exemption is the small business rate relief. This relief is available to businesses with a rateable value of £12,000 or less. If a property owner qualifies for the relief and their property has a rateable value of £2,900 or less, they will not be required to pay any business rates on the property. For properties with a rateable value between £2,900 and £12,000, the relief is tapered on a sliding scale. This can provide significant savings for small businesses that own empty commercial properties.
Another exemption available to property owners is the charitable rate relief. Charities are entitled to an 80% reduction in their business rates, which can provide significant savings for charitable organizations that own empty commercial properties. However, it is important to note that the property must be wholly or mainly used for charitable purposes in order to qualify for the relief.
In addition to exemptions, there are also relief options available to property owners who find themselves with empty commercial properties. For example, property owners may be able to apply for the empty property rate relief. This relief provides a 100% discount on business rates for properties that have been empty for three months or more, or six months for industrial properties. Property owners can usually receive this relief for up to three months after the property becomes occupied again.
It is important for property owners to be aware of their obligations when it comes to paying rates on empty commercial properties. Failure to pay business rates on an empty property can result in legal action being taken against the property owner, including fines and court proceedings. Therefore, it is crucial for property owners to stay informed about their obligations and to take advantage of any exemptions or relief options that may be available to them.
In conclusion, rates payable on empty commercial property can be a significant expense for property owners. Property owners are generally required to pay full business rates on empty properties for the first three months, after which the rateable value of the property is doubled. However, there are exemptions and relief options available to property owners, such as small business rate relief, charitable rate relief, and empty property rate relief. It is important for property owners to be aware of their obligations and to take advantage of any available relief options in order to minimize the financial impact of owning empty commercial properties.