When it comes to running a business, there are countless expenses to consider. From payroll and inventory to utilities and rent, the costs can quickly add up. One lesser-known expense that many business owners may not be aware of is void business rates.
void business rates refer to the rates that businesses must pay on commercial properties that are empty or unoccupied. These rates are typically charged at the standard business rate, although some local authorities may offer discounted rates for a limited period of time. Void business rates can be a significant financial burden for businesses, especially those that are struggling or facing economic challenges.
There are several reasons why a commercial property may be empty and subject to void business rates. It could be that the property is newly built and has yet to be occupied, or that the previous tenant has moved out and a new tenant has not yet been found. In some cases, the property may be undergoing renovations or repairs, or the business owner may simply be unable to find a new tenant.
Regardless of the reason, it is important for business owners to understand how void business rates work and how they can affect their bottom line. Here are a few key things to know about void business rates:
1. How void business rates are calculated
Void business rates are calculated based on the rateable value of the property in question. The rateable value is determined by the Valuation Office Agency and is used to calculate the business rates that a property owner must pay. When a property becomes empty, the owner is required to notify the local council, who will then reassess the rateable value and calculate the void business rates accordingly.
2. Exemptions and reliefs
While void business rates are generally charged at the standard rate, there are some exemptions and reliefs available to certain types of properties. For example, if a property is undergoing major renovations or repairs, the owner may be eligible for a temporary exemption from void business rates. In addition, properties with a rateable value of less than £2,900 are not subject to void business rates at all.
3. The impact on businesses
Void business rates can have a significant impact on businesses, especially small businesses that may already be struggling to make ends meet. For businesses that are unable to find a new tenant quickly, void business rates can quickly accumulate and become a major financial burden. In some cases, business owners may even be forced to close their doors permanently as a result of the high cost of void business rates.
4. Strategies for mitigating the impact
There are several strategies that business owners can use to mitigate the impact of void business rates. For example, owners of empty properties may be able to negotiate with the local council to reduce the amount of void business rates that they are required to pay. In addition, some owners may choose to rent out their empty properties on a short-term basis to generate additional income and offset the cost of void business rates.
5. Seeking professional advice
Navigating the world of void business rates can be complex, especially for business owners who are not familiar with the process. As such, it is important for business owners to seek professional advice from a qualified commercial property advisor or tax expert. These professionals can help business owners understand their obligations regarding void business rates and develop a strategy for minimizing their impact on the business.
In conclusion, void business rates are an often-overlooked expense that can have a significant impact on businesses. By understanding how void business rates are calculated, exploring exemptions and reliefs, and seeking professional advice, business owners can mitigate the financial burden of void business rates and ensure the long-term success of their business.