As a business owner, understanding the various expenses that come with running your company is crucial to maintaining financial stability. One of the costs that can catch many businesses off guard is void business rates. These rates can have a significant impact on your bottom line, so it’s important to have a clear understanding of what they are and how they work.
What are void business rates?
Void business rates, also known as empty property rates, are a tax that is applied to commercial properties that are empty or unoccupied. This tax is in addition to the regular business rates that a company must pay on a property that is actively being used for business purposes. The purpose of void business rates is to encourage property owners to bring their empty properties back into use, therefore helping to stimulate economic activity and prevent urban blight.
How are void business rates Calculated?
The amount of void business rates that a property owner must pay is calculated based on the rateable value of the property. The rateable value is determined by the Valuation Office Agency (VOA) and is used to assess how much a property could be rented out for on the open market. The rateable value is then used to calculate the business rates that are due on the property.
When a property becomes vacant, the owner is eligible for a period of relief from paying the full amount of void business rates. However, this relief period is limited, and after a certain period of time (usually three months for industrial properties and six months for all other properties), the full void business rates become due.
It’s important for property owners to be aware of these time limits and make arrangements to either bring the property back into use or apply for any available exemptions or reliefs to avoid being hit with a hefty bill for void business rates.
Exemptions and Reliefs
There are certain exemptions and reliefs available for property owners who are faced with void business rates. For example, properties with a rateable value of less than £2,900 are completely exempt from void business rates. Additionally, there are certain types of properties, such as agricultural buildings, that are exempt from void business rates regardless of their rateable value.
Property owners may also be able to apply for temporary relief from void business rates if they can demonstrate that they are actively trying to bring the property back into use. This could include providing evidence of marketing efforts or renovation work being carried out on the property. It’s important for property owners to explore all available options for relief in order to minimize the financial impact of void business rates on their business.
Challenges for Business Owners
Void business rates can present a significant challenge for business owners, especially in situations where a property becomes vacant unexpectedly or if the property is difficult to rent out due to its location or condition. In these cases, the burden of paying void business rates can put a strain on the finances of a business, particularly if the property owner is unable to find a new tenant within the relief period.
For some businesses, the cost of void business rates may be a deciding factor in whether to keep a property or to sell it. In cases where the property is no longer viable for business purposes, the financial burden of void business rates may outweigh the potential benefits of holding onto the property.
Final Thoughts
Void business rates are an additional expense that businesses must be aware of when it comes to managing their properties. By understanding how void business rates are calculated and what exemptions and reliefs are available, property owners can take steps to minimize the financial impact of these rates on their business.
It’s important for businesses to have a plan in place for dealing with void business rates, whether that means actively marketing a vacant property, applying for relief, or considering selling the property if it no longer serves a viable business purpose. By staying informed and proactive, businesses can navigate the challenges of void business rates and make the best financial decisions for their company.