Business rates are a necessary expense for companies operating in the UK, used to fund local services and infrastructure. However, one particular type of business rates that often causes headaches for businesses is unoccupied business rates. These rates are charged on commercial properties that are empty, and the costs associated with them can add up quickly for companies that are not able to fill these vacant spaces.
The government introduced unoccupied business rates to incentivize property owners to keep their buildings in use and prevent the development of ghost towns with empty storefronts. While the intention is clear, the impact on businesses – especially during tough economic times or when industries are going through transitions – can be significant.
When a property becomes unoccupied, businesses are still required to pay business rates on that space. This is because the property is still benefiting from some local services, such as street cleaning and waste collection. These rates are typically set at 50% of the full business rates bill for the first three months a property is empty, and then rise to the full amount after that.
For many companies, these unoccupied business rates can represent a significant financial burden. This is especially true for retail businesses that are struggling in the era of online shopping, or for companies in declining industries that are forced to downsize or close locations. The costs associated with unoccupied business rates can add insult to injury for these businesses, making it even harder to recover and turn things around.
However, there are ways that businesses can manage and potentially reduce the impact of unoccupied business rates on their bottom line. One strategy is to actively market the property for rent or sale, as properties that are actively being marketed for occupation can receive a 3-month exemption from unoccupied rates. This can provide some breathing room for businesses that are working to find a new tenant or buyer for their space.
Another option is to consider the possibility of appealing the rateable value of the property. If a company believes that the rateable value of their property is incorrect or unfairly high, they can challenge this with the Valuation Office Agency. If successful, this can result in a reduction in the amount of business rates that are owed, providing some relief for companies that are struggling with these costs.
It is also important for companies to stay informed about changes to business rates legislation and any relief or support schemes that may be available. For example, during the COVID-19 pandemic, the government introduced a 100% relief on unoccupied business rates for retail, hospitality, and leisure businesses in England for the 2020-2021 tax year. Staying up to date on these changes can help businesses take advantage of any available support and reduce the financial impact of unoccupied business rates.
In conclusion, unoccupied business rates can be a significant financial burden for companies that are unable to fill vacant commercial properties. However, by actively marketing the property, appealing the rateable value, and staying informed about available relief schemes, businesses can work to manage and potentially reduce the impact of these costs. While unoccupied business rates are a challenge, companies that take proactive steps to address them can better navigate this aspect of business rates and focus on building a stronger, more resilient business overall.