When it comes to running a business, there are so many costs and expenses to consider. From payroll to rent, utilities to insurance, the list can feel never-ending. One cost that often gets overlooked or misunderstood is void business rates.
Void business rates are a unique and sometimes confusing aspect of running a business, but it is essential to understand their implications to avoid any surprises down the road. In this article, we will discuss what void business rates are, how they are calculated, and what you can do to mitigate their impact on your business.
What are void business rates?
Void business rates are the taxes that business owners must pay on commercial properties that are empty or not in use. These rates are imposed by local authorities to ensure that property owners do not leave their properties vacant for extended periods. The idea behind void business rates is to encourage property owners to either occupy or lease out their properties, thus contributing to the overall economic development of an area.
How are void business rates Calculated?
The calculation of void business rates can vary depending on the location and type of property. In most cases, the rates are based on the property’s rateable value, which is determined by the Valuation Office Agency (VOA). The rateable value is used to calculate the business rates that a property owner must pay, including void business rates when the property is empty.
In England, for example, the government has introduced specific rules regarding void business rates to discourage property owners from leaving their properties vacant. Under these rules, property owners are given a three-month grace period during which they are exempt from paying void business rates. After the three-month period expires, however, the property owner is required to pay the full rate unless they can prove that the property is genuinely being marketed for rent.
In Scotland, the rules regarding void business rates are slightly different. Property owners are given a six-month grace period during which they are exempt from paying void business rates. However, after the six-month period expires, property owners must pay 50% of the rateable value as void business rates unless they can provide evidence of ongoing efforts to market the property.
How to Mitigate the Impact of void business rates
Given the potential financial burden that void business rates can impose on business owners, it is essential to find ways to mitigate their impact. Here are a few strategies that business owners can consider:
1. Negotiate with Your Local Authority: In some cases, local authorities may be willing to offer concessions or discounts on void business rates, especially if the property owner can demonstrate that they are actively trying to occupy or lease out the property. It is worth reaching out to your local authority to discuss potential options for reducing your void business rates.
2. Rent Out the Property: One of the most effective ways to avoid paying void business rates is to rent out the property. By finding tenants for your commercial space, you can generate rental income that can help offset the cost of void business rates. Additionally, renting out the property can also contribute to the overall economic vitality of the area.
3. Consider Temporary Use: If finding a long-term tenant for your property is challenging, you may want to consider temporary uses for the space, such as pop-up shops or events. By utilizing the property for short-term purposes, you can generate income while also demonstrating to the local authorities that you are actively trying to bring the property back into use.
In conclusion, void business rates are an important consideration for business owners who own commercial properties. Understanding how these rates are calculated and exploring strategies to mitigate their impact can help business owners navigate this aspect of property ownership successfully. By staying informed and proactive, business owners can minimize the financial burden of void business rates and keep their properties in productive use.