When it comes to running a business, there are many expenses that business owners must factor in to their budget. One such expense that can catch many business owners off guard is void business rates. Void business rates are a type of tax that business owners must pay when their property is vacant for a certain period of time. In this article, we will explore what void business rates are, how they are calculated, and what business owners can do to minimize their impact.
What are void business rates?
Void business rates, also known as empty property rates, are taxes that business owners must pay on commercial properties that are empty for an extended period of time. In the United Kingdom, business rates are levied on most non-domestic properties, including shops, offices, warehouses, and factories. These rates are used to fund local services such as schools, roads, and public transportation.
When a commercial property becomes vacant, business owners are still required to pay business rates on the property, even if it is not generating any income. This can be a significant financial burden for business owners, especially if the property remains empty for an extended period of time.
How are void business rates Calculated?
The amount of void business rates that a business owner must pay is calculated based on the rateable value of the property. The rateable value is an estimate of the rental value of the property as determined by the Valuation Office Agency (VOA). The VOA reassesses the rateable value of commercial properties every five years.
Business rates are typically calculated as a percentage of the rateable value of a property. For properties that are empty, business owners must pay 100% of the business rates for the first three months that the property is vacant. After three months, the rateable value is reduced to 50%, but business owners are still required to pay 50% of the business rates until the property is occupied.
In some cases, business owners may be eligible for exemptions or reliefs on void business rates. For example, if a property is being renovated or undergoing repairs, business owners may be able to apply for a temporary exemption on business rates. It is important for business owners to check with their local council to see if they qualify for any exemptions or reliefs.
Minimizing the Impact of void business rates
Although void business rates can be a significant financial burden for business owners, there are steps that they can take to minimize their impact. One option is to negotiate with the local council to reduce the amount of void business rates that they are required to pay. Some councils may be willing to grant business owners a temporary reduction or even a waiver on business rates if they can demonstrate that they are actively trying to rent out the property.
Another option for business owners is to consider leasing out the property on a short-term basis to generate rental income and avoid paying void business rates. For example, business owners could rent out the property for pop-up shops, events, or temporary storage to generate income while they search for a long-term tenant.
Business owners may also want to consider investing in their property to make it more attractive to potential tenants. This could involve making improvements to the property, such as upgrading the facilities or enhancing the aesthetics, to increase its rental value and reduce the amount of void business rates that they are required to pay.
In conclusion, void business rates can be a significant financial burden for business owners, especially if their property remains empty for an extended period of time. It is important for business owners to understand how void business rates are calculated and to explore options for minimizing their impact. By negotiating with the local council, leasing out the property on a short-term basis, and investing in the property, business owners can reduce the amount of void business rates that they are required to pay and help alleviate some of the financial strain on their business.