As a business owner, you may be familiar with the concept of business rates – a tax paid on non-residential properties used for business purposes. However, an often overlooked aspect of business rates is the void business rates, which are applicable when a property is empty and not generating any income.
Void business rates can be a significant financial burden for business owners, especially if they have multiple properties or are experiencing periods of vacancy. In this article, we will explore what void business rates are, how they are calculated, and what steps businesses can take to minimize the impact of void business rates.
What are void business rates?
Void business rates are a form of tax imposed by local authorities on commercial properties that are empty and not being used for business purposes. While business rates are typically based on the rental value of a property, void business rates are charged at a higher rate to encourage property owners to bring their vacant properties back into use.
The rate at which void business rates are charged varies depending on the location of the property and its rateable value. In some cases, properties may be exempt from void business rates for a limited period of time, such as newly built properties or those undergoing major renovations.
How are void business rates Calculated?
The calculation of void business rates is based on the rateable value of the property and the relevant multiplier set by the local authority. The rateable value is determined by the Valuation Office Agency (VOA) and reflects the rent that the property could achieve on the open market.
The multiplier is set annually by the government and is used to calculate the amount of business rates payable. For properties that have been empty for more than three months, the multiplier is doubled, resulting in a higher rate of void business rates.
In some cases, business owners may be eligible for relief or exemptions from void business rates, such as when a property is in a designated enterprise zone or is undergoing repairs or renovations. It is important for business owners to check with their local authority to see if they qualify for any exemptions or reliefs.
Minimizing the Impact of void business rates
Given the financial impact of void business rates on businesses, it is essential for business owners to take steps to minimize their liability. Here are some strategies that businesses can employ to reduce the impact of void business rates:
1. Utilize Empty Property Relief: In some cases, properties may be eligible for empty property relief, which provides a 100% exemption from void business rates for a specified period of time. Business owners should check with their local authority to see if they qualify for this relief.
2. Consider Short-Term Leasing: If a property is likely to be vacant for an extended period of time, business owners may want to consider leasing the property on a short-term basis to generate some income and reduce their void business rates liability.
3. Explore Business Rates Relief Schemes: Some local authorities offer business rates relief schemes to support businesses that are struggling financially or facing hardship. Business owners should inquire with their local authority about any relief schemes that may be available to them.
4. Appeal the Rateable Value: If business owners believe that the rateable value of their property is inaccurate, they have the right to appeal to the Valuation Office Agency. By obtaining a lower rateable value, business owners can reduce the amount of void business rates payable.
In conclusion, void business rates are an additional cost that business owners must be mindful of when managing their commercial properties. By understanding what void business rates are, how they are calculated, and what steps businesses can take to minimize their impact, business owners can better navigate this aspect of their financial obligations. It is important for business owners to stay informed about void business rates and seek guidance from their local authority or a professional advisor to ensure they are managing this aspect of their business effectively.