Business rates on empty properties can be a significant financial burden for property owners. In the UK, empty commercial properties are subject to business rates after a grace period of three months. This can add up to thousands of pounds in annual costs, especially for larger properties in prime locations. However, there are ways to avoid or reduce these costs legally. In this article, we will explore six strategies to help property owners in avoiding business rates on empty property.
1. Temporary occupation
One of the most effective ways to avoid paying business rates on an empty property is by allowing temporary occupation. This can be done by renting out the property on a short-term basis to events organizers, pop-up shops, or even artists looking for studio space. By having temporary occupants in the property, it can qualify for an exemption from business rates for up to six months. This can help to reduce costs while also bringing in some rental income during the period.
2. Partial occupation
If finding a temporary occupant is not feasible, another option is to partially occupy the property yourself. By using part of the property for storage, administrative purposes, or any other business activity, the property may qualify for a partial exemption from business rates. This means that only the occupied portion of the property will be subject to business rates, reducing the overall cost significantly.
3. Property development
Another way to avoid business rates on empty property is by demonstrating that the property is undergoing development or renovation. Properties that are in the process of being redeveloped or refurbished may be eligible for an exemption from business rates for a period of up to 18 months. Property owners can provide evidence of development plans, building permits, and timelines to claim this exemption.
4. Charity occupation
Property owners can also consider allowing charitable organizations to use the empty property for their operations. Charities are eligible for 80% relief on business rates, and if they occupy the property for at least six weeks, the property may be exempt from business rates altogether. This can be a win-win situation for both parties, as the property owner avoids paying business rates while contributing to a good cause.
5. Empty property relief
In some cases, properties that have been empty for an extended period may qualify for empty property relief. This relief can provide a 100% exemption from business rates for a certain period, depending on the local authority’s policies. Property owners can apply for this relief by demonstrating that the property has been vacant for a specific period, usually ranging from three months to two years, and that efforts have been made to market the property for rental or sale.
6. Small business rates relief
For property owners who own multiple properties or have empty properties as part of their portfolio, they may be able to take advantage of small business rates relief. This relief is aimed at small business owners with a rateable value below a certain threshold, and it can provide discounts or exemptions on business rates. By qualifying for small business rates relief, property owners can reduce the overall financial burden of paying business rates on empty properties.
In conclusion, there are several strategies that property owners can use to avoid or reduce business rates on empty properties. Whether it is through temporary occupation, partial occupation, property development, charity occupation, empty property relief, or small business rates relief, there are legal ways to minimize the financial impact of business rates on vacant properties. By exploring these options and working closely with local authorities, property owners can effectively manage their costs and make the most out of their properties.