As a business owner, there are many costs and expenses that you need to budget for, including rent, utilities, and employee wages. However, one cost that often catches many business owners off guard is unoccupied business rates. These rates can add a significant financial burden to your business if you are not prepared for them. In this article, we will discuss what unoccupied business rates are, how they are calculated, and what you can do to minimize the impact they have on your business.
unoccupied business rates, also known as empty property rates, are taxes that are levied on commercial properties that are not being used. These rates are separate from regular business rates and are charged in addition to them. The idea behind unoccupied business rates is to incentivize property owners to keep their properties occupied and in use, rather than leaving them vacant.
In the UK, unoccupied business rates are usually charged at 50% of the normal business rate for the first three months that a property is vacant. After three months, the rate can increase to a hefty 100%. This means that if you have a commercial property that has been vacant for over three months, you could be facing a significant bill in unoccupied business rates.
The calculation of unoccupied business rates is based on the rateable value of the property. The rateable value is an estimate of the annual market rent that the property could fetch if it were let on the open market. This value is determined by the Valuation Office Agency (VOA) and is used to calculate both regular business rates and unoccupied business rates.
There are some exemptions to unoccupied business rates that business owners can take advantage of. For example, if your property is newly built, you may be eligible for a 100% exemption on unoccupied business rates for the first three months. Additionally, properties that are undergoing major structural repairs or are in the process of being demolished may also be exempt from unoccupied business rates.
If you are struggling to pay your unoccupied business rates, there are a few things you can do to try and minimize the impact on your business. One option is to try to negotiate a payment plan with your local council. They may be willing to work with you to come up with a schedule that allows you to pay off the rates in instalments, rather than in one lump sum.
Another option is to consider renting out the property, even if only temporarily, in order to avoid paying unoccupied business rates. By finding a tenant, even on a short-term basis, you can show that the property is being used and potentially qualify for a reduced rate on unoccupied business rates.
If renting out the property is not an option, you may also want to consider appealing the rateable value of the property. If you believe that the rateable value is incorrect, you can submit an appeal to the VOA. If successful, this could result in a lower rateable value and a lower bill for unoccupied business rates.
In some cases, it may be more cost-effective to demolish or redevelop the property rather than continue to pay unoccupied business rates. While this may seem like a drastic step, it could ultimately save you money in the long run.
In conclusion, unoccupied business rates can be a significant financial burden for business owners, especially if they are not prepared for them. By understanding what unoccupied business rates are, how they are calculated, and what options are available for minimizing their impact, you can better navigate this aspect of running a business. Whether it’s negotiating a payment plan, finding a temporary tenant, appealing the rateable value, or considering demolishing the property, there are steps you can take to reduce the financial strain of unoccupied business rates.