Business rates can be a significant financial burden for property owners, especially when a property is sitting empty. In some cases, the cost of business rates on an empty property can even exceed the rental income that could be generated by leasing it out. Fortunately, there are strategies that property owners can use to minimize or even eliminate business rates on their vacant properties. In this article, we will explore seven effective strategies for avoiding business rates on empty property.
1. Claiming the Empty Property Relief
One of the most common ways to avoid business rates on empty property is to claim Empty Property Relief. This relief is available for most types of commercial properties, including shops, offices, and warehouses. In England, the relief provides a full exemption from business rates for the first three months that a property is empty. After the initial three-month period, the relief is reduced to 50% for shops and offices, and 100% for industrial properties.
To claim Empty Property Relief, property owners must notify their local council that the property is vacant. It is important to keep the council informed of any changes in the property’s status to ensure that the relief continues to apply. Property owners should also be aware that Empty Property Relief does not apply to properties that are considered exempt from business rates, such as listed buildings.
2. Generating Temporary Business Rates Relief through Occupancy
Another strategy for avoiding business rates on empty property is to generate temporary relief through short-term occupancy. By allowing a temporary occupant, such as a pop-up shop or charity organization, to use the vacant property, property owners can qualify for either Small Business Rates Relief or Charity Relief.
Small Business Rates Relief provides a 100% exemption from business rates for properties with a rateable value of £12,000 or less. Charity Relief offers a similar exemption for properties occupied by registered charities. By temporarily leasing the property to a qualifying occupant, property owners can take advantage of these relief schemes and avoid paying business rates on the empty property.
3. Exploring the Vacant Property Credit
In Scotland, property owners can apply for the Vacant Property Credit, which provides relief from business rates for vacant industrial properties. Under this scheme, eligible properties are entitled to a 50% reduction in business rates for the first year they are empty. Subsequent reductions are available for up to five years, providing significant savings for property owners with long-term vacancies.
To qualify for the Vacant Property Credit, property owners must submit an application to their local council and provide evidence that the property meets the eligibility criteria. By taking advantage of this credit, property owners can reduce the financial impact of business rates on their empty industrial properties.
4. Utilizing the Business Rates Relief for Newly Built Properties
Property owners with newly constructed properties can avoid business rates on empty property by utilizing the Business Rates Relief for Newly Built Properties. This relief provides an exemption from business rates for up to 18 months for newly built or refurbished properties. By claiming this relief, property owners can offset the costs of business rates during the initial occupancy period.
To qualify for the Business Rates Relief for Newly Built Properties, property owners must notify their local council within three months of the property being completed. It is important to provide the necessary documentation, such as building completion certificates, to support the application for relief. By taking advantage of this scheme, property owners can minimize the financial impact of business rates on their newly constructed properties.
5. Applying for the Enterprise Zone Relief
Property owners with empty properties located within designated Enterprise Zones may be eligible for Enterprise Zone Relief. This relief provides a full exemption from business rates for up to five years for properties located in designated Enterprise Zones. By applying for this relief, property owners can attract potential tenants by offering them a significant cost-saving opportunity.
To qualify for Enterprise Zone Relief, property owners must demonstrate that the property is located within a designated Enterprise Zone and meets the eligibility criteria. It is important to consult with the local council to ensure that the property qualifies for this relief. By taking advantage of Enterprise Zone Relief, property owners can maximize the value of their empty properties and attract new tenants.
6. appealing the Rateable Value of the Property
If property owners believe that the rateable value of their property is incorrect, they have the right to appeal to the Valuation Office Agency (VOA). By appealing the rateable value, property owners can potentially reduce their business rates liability and save money on their empty property.
To appeal the rateable value of a property, property owners must provide evidence to support their claim. This may include information about the property’s condition, rental value, and comparable properties in the area. It is important to gather all relevant documentation and present a strong case to the VOA to maximize the chances of a successful appeal.
7. Investing in Property Development
One long-term strategy for avoiding business rates on empty property is to invest in property development. By refurbishing or redeveloping the property to attract new tenants, property owners can generate rental income and minimize the financial impact of business rates. In addition to generating income, property development can increase the value of the property and create a more attractive investment opportunity.
Property owners must carefully consider the costs and benefits of property development to ensure that it is a viable option for avoiding business rates on empty property. It is important to conduct thorough research and seek professional advice to assess the feasibility of property development and maximize the return on investment.
In conclusion, there are several effective strategies that property owners can use to avoid business rates on empty property. By claiming Empty Property Relief, generating temporary relief through occupancy, exploring the Vacant Property Credit, utilizing the Business Rates Relief for Newly Built Properties, applying for Enterprise Zone Relief, appealing the rateable value of the property, and investing in property development, property owners can minimize the financial burden of business rates and maximize the value of their empty properties. By understanding the available relief schemes and exploring all options, property owners can successfully navigate the challenges of business rates on empty property and optimize their property investments.