When it comes to running a business, there are many considerations that owners must take into account. One of the most important factors to consider is the cost of operating the business, which includes expenses such as rent, utilities, and taxes. One tax that business owners may not be as familiar with is void business rates, also known as empty property rates. In this article, we will discuss what void business rates are, how they are calculated, and what businesses can do to minimize their impact.
What are void business rates?
Void business rates are taxes that are levied on commercial properties that are empty or unused. These rates are meant to incentivize property owners to keep their buildings occupied, as empty properties can have a negative impact on the local economy. The idea behind void business rates is to encourage property owners to put their buildings to productive use, rather than letting them sit vacant.
How are void business rates Calculated?
The calculation of void business rates is based on the rateable value of the property. The rateable value is determined by the Valuation Office Agency (VOA) and is used to calculate the amount of business rates that a property owner must pay. When a property becomes empty, the property owner is still required to pay business rates, but they may be entitled to a discount.
Initially, properties that have been empty for three months or less are exempt from paying void business rates. However, after the three-month grace period, the property owner is required to pay 50% of the rateable value in void business rates. After six months of vacancy, the property owner must pay the full rateable value in void business rates.
How Can Businesses Minimize the Impact of void business rates?
There are several strategies that businesses can employ to minimize the impact of void business rates on their bottom line. One option is to consider leasing the property to a temporary tenant. By leasing the property to a short-term tenant, the property owner can avoid paying void business rates and generate some rental income in the process.
Another option is to consider applying for an exemption or relief on void business rates. In some cases, properties may be entitled to relief if they are undergoing renovation or are in the process of being reoccupied. Property owners should check with their local council to see if they qualify for any exemptions or relief programs.
Property owners can also consider appealing the rateable value of their property. If they believe that the rateable value has been set too high, they can submit an appeal to the VOA. If successful, the rateable value may be reduced, resulting in lower void business rates.
In Conclusion
Void business rates are an important consideration for property owners, especially those with empty or unused commercial properties. By understanding how void business rates are calculated and exploring ways to minimize their impact, property owners can effectively manage this aspect of their business expenses. Whether through leasing to temporary tenants, applying for exemptions or relief, or appealing the rateable value, there are ways to mitigate the financial burden of void business rates. By staying informed and proactive, businesses can navigate the complexities of void business rates and make strategic decisions to protect their bottom line.