When it comes to owning commercial property, there are many factors to consider, including the rates payable on empty commercial property. These rates, also known as empty property rates or business rates, can have a significant impact on the financial health of a business. In this article, we will explore what empty property rates are, why they exist, and how they are calculated.
Empty property rates are a form of local taxation that applies to commercial properties that are empty. The rates are charged by local authorities in England, Scotland, and Wales, and are designed to encourage property owners to occupy and make use of their properties. The idea is that by charging rates on empty properties, owners will be incentivized to rent out or sell their properties, thus helping to reduce vacancy rates and stimulate economic activity.
The rates payable on empty commercial property can vary depending on the location and size of the property. In England, for example, empty property rates are typically set at 100% of the normal business rates after a property has been empty for three months. In Scotland, the rates are set at 90% after three months, then increase to 100% after six months. In Wales, the rates are set at 50% after three months, then increase to 100% after six months.
It is important to note that there are some exemptions and reliefs available for certain types of properties. For example, properties with a rateable value of less than £2,900 in England are exempt from empty property rates, as are certain types of industrial properties. There are also temporary exemptions available for properties that are undergoing refurbishment or are unable to be occupied due to legal reasons.
Calculating the rates payable on empty commercial property can be a complex process. The rates are based on the rateable value of the property, which is determined by the Valuation Office Agency in England, the Scottish Assessors in Scotland, and the Valuation Office Agency in Wales. The rateable value is an estimate of the annual rent that a property could achieve on the open market.
Once the rateable value has been determined, it is then multiplied by the relevant multiplier to calculate the rates payable. The multiplier is set by the government each year and is used to calculate the actual amount of rates payable. In England, for example, the multiplier for the 2021/22 tax year is 51.2p, meaning that for a property with a rateable value of £10,000, the rates payable would be £5,120.
It is worth noting that there are also ways to reduce the rates payable on empty commercial property. For example, owners can take advantage of certain reliefs and exemptions that are available, such as the small business rate relief scheme in England, which provides relief for properties with a rateable value below a certain threshold. Owners can also challenge the rateable value of their property if they believe it has been set too high.
In conclusion, rates payable on empty commercial property are an important consideration for property owners. By understanding how these rates are calculated and the exemptions and reliefs that are available, owners can take steps to minimize the financial impact of empty property rates. Ultimately, the goal of these rates is to encourage property owners to occupy and make use of their properties, thus helping to stimulate economic activity and reduce vacancy rates.