Business rates are a tax imposed on commercial properties in the UK and are used to fund local services. However, when a commercial property is vacant, there are a different set of rules that apply known as void business rates. In this article, we will delve into what void business rates are, how they are calculated, and what businesses can do to mitigate their impact.
void business rates are essentially a tax on empty commercial properties. These rates are meant to encourage property owners to keep their buildings occupied and avoid leaving them vacant for extended periods of time. The idea behind void business rates is to prevent property owners from deliberately keeping properties empty in order to avoid paying regular business rates.
Calculating void business rates can be a complex process. The rates are typically based on the rateable value of the property, which is determined by the Valuation Office Agency (VOA). The rateable value represents the annual rental value of the property as of a specific date. The void business rate is then calculated as a percentage of the rateable value.
The exact percentage used to calculate void business rates can vary depending on the local authority. In some cases, the void business rate can be set at the full rateable value of the property, while in other cases it may be discounted. It is important for property owners to check with their local authority to understand the specific void business rate that applies to their property.
Businesses that are struggling to pay their void business rates may be able to apply for exemptions or reliefs. For example, small businesses may be eligible for small business rate relief, which can reduce the amount of void business rates they are required to pay. Additionally, properties that are undergoing renovation or repair work may be eligible for exemptions from void business rates.
One common misconception about void business rates is that they only apply to commercial properties that are completely empty. In reality, void business rates can also apply to properties that are only partially occupied. If a commercial property is only partially occupied, the property owner may still be required to pay void business rates on the unused portion of the property.
Another important consideration for businesses dealing with void business rates is the impact they can have on cash flow. For businesses that are already struggling financially, having to pay void business rates on top of regular business rates can be a significant burden. This is why it is important for businesses to take steps to minimize their void business rates wherever possible.
One strategy that businesses can use to mitigate the impact of void business rates is to actively market their vacant properties. By finding new tenants for their empty properties, businesses can avoid having to pay void business rates altogether. Property owners can also consider offering incentives such as rent-free periods or reduced rents to attract new tenants.
Another option for businesses dealing with void business rates is to consider renting out their vacant properties on a short-term basis. By renting out the property for events or temporary use, businesses can generate income from the property while they search for a long-term tenant. This can help offset the cost of void business rates and prevent the property from sitting empty.
In conclusion, void business rates can be a significant financial burden for businesses that own vacant commercial properties. Understanding how void business rates are calculated and exploring options for exemptions or reliefs can help businesses mitigate their impact. By actively marketing vacant properties and considering short-term rentals, businesses can minimize their void business rates and avoid a drain on their cash flow.