Business rates are a tax paid by businesses in the UK on the properties they occupy. The rates are calculated based on the rateable value of the property and are used to fund local services such as police, fire, and waste collection. However, when a property becomes vacant, business owners are still required to pay what is known as void business rates. These rates can be a significant financial burden on business owners, adding to the already challenging task of managing a vacant property.
void business rates are a contentious issue for many business owners, as the rates can be a financial strain on businesses that are already struggling. This is especially true for small businesses, which may not have the financial resources to cover the costs of void business rates while also dealing with the challenges of a vacant property.
One of the main reasons why void business rates are so burdensome for business owners is that the rates are calculated based on the rateable value of the property, rather than the actual money coming in from the property. This means that even if a property is not generating any income, business owners are still required to pay business rates on the property. This can be particularly challenging for businesses that are struggling to find tenants or are waiting for a property to be refurbished before it can be rented out.
Another issue with void business rates is that they can create a disincentive for business owners to bring vacant properties back into use. The high cost of void business rates can make it financially unfeasible for business owners to invest in refurbishing a property or finding a new tenant, especially in areas where demand for commercial property is low. This can lead to properties sitting empty for extended periods of time, blighting local communities and preventing much-needed investment in the area.
There are some exemptions and relief schemes available for business owners facing void business rates. For example, businesses are entitled to a three-month exemption from void business rates when a property becomes vacant. This is intended to give business owners some breathing room to find a new tenant or to refurbish the property. In addition, small businesses with properties with a rateable value of less than £2,900 are eligible for 50% relief on void business rates for the first three months.
There are also various relief schemes available for businesses that are experiencing financial hardship and are struggling to pay their business rates, including the Small Business Rate Relief scheme and the Retail Discount scheme. These schemes can provide much-needed financial support to businesses that are facing void business rates and are struggling to keep their doors open.
However, despite these relief schemes, void business rates remain a significant financial burden for many business owners. The current system of calculating business rates based on the rateable value of the property, rather than the income generated from the property, creates an unfair situation where businesses are penalized for circumstances beyond their control. This is particularly challenging for businesses in the current economic climate, where many are already struggling to stay afloat due to the impact of the COVID-19 pandemic.
In order to address the issue of void business rates, there have been calls for reform of the business rates system. Some have suggested that business rates should be based on the actual income generated from a property, rather than the rateable value. This would ensure that business rates are more reflective of a business’s ability to pay, rather than being a fixed cost that must be paid regardless of circumstance.
Others have suggested that void business rates should be reduced or waived altogether for businesses that are actively trying to bring a property back into use. This would incentivize business owners to invest in refurbishing properties or finding new tenants, rather than leaving them empty to avoid paying void business rates.
Ultimately, void business rates remain a significant issue for many business owners, adding to the financial strain of managing a vacant property. While there are relief schemes available to help businesses facing void business rates, more needs to be done to reform the system and ensure that business rates are fair and reflective of a business’s circumstances. Only then can business owners truly feel supported in their efforts to bring vacant properties back into use and contribute to the local economy.