When it comes to running a business, there are a lot of costs to consider. From overhead expenses like rent and utilities to employee salaries and inventory costs, the list of financial obligations can seem never-ending. One cost that many business owners often overlook or may not fully understand is void business rates.
void business rates are one of those fees that can catch business owners off guard if they are not properly informed. But fear not, in this article we will break down what void business rates are, how they are calculated, and what you can do to ensure you are not paying more than you should.
Void business rates are a type of tax that is applied to commercial properties that are empty or unoccupied. The logic behind void business rates is that even though a property is not actively being used, it still requires services like garbage collection, street lighting, and emergency services. Therefore, the local government imposes a tax on the property owner to help cover these costs.
The rate at which void business rates are charged varies depending on the location of the property and its size. In general, void business rates are calculated based on the rateable value of the property. The rateable value is determined by the Valuation Office Agency (VOA) and represents the annual rental value of the property as of a certain date.
For properties that have been empty for more than three months, void business rates can be up to 100% of the rateable value. This means that if your property has a rateable value of £10,000 per year, you could be looking at paying £10,000 in void business rates for the year that the property remains empty.
One way to reduce the amount of void business rates you have to pay is to apply for a temporary exemption. In England and Wales, if a property has been empty for three months or more, the owner can apply for a 100% exemption for the first three months of vacancy. After that, the rates will be reduced to 50% for the next three months. This can provide some relief for property owners who are struggling with the financial burden of void business rates.
Another option for reducing void business rates is to seek out relief through the government’s Small Business Rate Relief scheme. This scheme is designed to help small businesses with a rateable value of less than £15,000 per year. If your property falls under this threshold, you may be eligible for relief on your void business rates.
It is important to note that void business rates can still be a significant financial burden for property owners, especially if the property remains empty for an extended period of time. In some cases, the cost of void business rates can even exceed the rental income that the property would generate if it were occupied. This can put property owners in a tough financial position and may even deter them from investing in new properties or refurbishing existing ones.
To avoid falling into this financial trap, it is crucial for property owners to carefully consider the implications of void business rates before purchasing or leaving a property empty. Conducting thorough research on the potential void business rates of a property can help you make an informed decision and avoid any financial surprises down the line.
In addition, working with a professional property management company or accountant can also help you navigate the complexities of void business rates and ensure that you are not overpaying. These professionals can provide valuable insight and guidance on how to minimize your void business rates and maximize your profits.
Overall, void business rates are an unavoidable cost for property owners of unoccupied commercial properties. However, with careful planning and the right support, you can mitigate the financial impact of these rates and protect your bottom line. By staying informed and proactive, you can navigate void business rates with confidence and continue to grow your business successfully.