When it comes to running a business, there are many costs that business owners need to be aware of. One of these costs is business rates, which are taxes levied on commercial properties. However, what happens when a commercial property becomes vacant? This is where void business rates come into play.
void business rates are essentially taxes that business owners must continue to pay even when their property is empty and not generating any income. This can be a significant burden for businesses, especially when they are already facing financial challenges. In this article, we will explore what void business rates are, why they exist, and what business owners can do to minimize their impact.
Why do void business rates exist?
void business rates exist to discourage property owners from leaving their properties empty for extended periods of time. The idea is that if property owners are required to continue paying taxes on their empty properties, they will be incentivized to find tenants more quickly or put the property to use in some other way. This is meant to prevent buildings from falling into disrepair and becoming eyesores in the community.
However, many business owners feel that void business rates are unfair, especially when they are already struggling to keep their businesses afloat. Paying taxes on a property that is not generating any income can put a significant strain on cash flow and make it even more difficult for businesses to survive.
How are void business rates calculated?
void business rates are calculated based on the rateable value of the property. The rateable value is set by the Valuation Office Agency (VOA) and is used to determine how much tax a property owner must pay. When a property becomes vacant, the rateable value is still used to calculate the void business rates, but the property owner may be eligible for some relief depending on how long the property has been empty.
In England, for example, property owners are granted a three-month exemption from void business rates when a property becomes empty. After the three-month period, full void business rates are payable unless the property falls into one of the following categories:
– Properties with a rateable value of less than £2,900 are exempt from void business rates.
– Properties that are being refurbished or undergoing structural changes may be eligible for relief.
– Properties that are deemed to be temporarily unoccupied, such as those undergoing repairs after a fire or flood, may also be eligible for relief.
It is important for property owners to stay informed about the rules and regulations surrounding void business rates in their area to ensure they are not overpaying.
What can business owners do to minimize the impact of void business rates?
There are several strategies that business owners can employ to minimize the impact of void business rates on their finances. One option is to negotiate with the local council to see if they can offer any relief or payment plans to help make the burden more manageable. It may also be worth exploring whether there are any business rates relief schemes or exemptions that the property may be eligible for.
Another option is to consider subletting the property to another business on a short-term basis. This can help generate some income while the property is vacant and may also help reduce the void business rates that need to be paid.
Finally, some property owners choose to invest in their properties while they are empty in order to make them more attractive to potential tenants. This may involve making repairs, upgrading facilities, or even changing the layout of the space to make it more appealing. By investing in the property, business owners may be able to attract tenants more quickly and reduce the amount of time that the property is empty.
In conclusion, void business rates can be a significant burden for business owners, especially when they are already facing financial challenges. However, by staying informed about the rules and regulations surrounding void business rates, negotiating with the local council, exploring relief options, and investing in the property, business owners can minimize the impact of void business rates on their finances and hopefully find tenants more quickly to fill their vacant spaces.