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Understanding business rates when a property is empty

Written by: Craig Newton on Monday 22/05/2017

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As the owner of one or more commercial properties, you’ll be aware that there are inevitably periods when your asset stands empty. Here we take a look at how business rates apply in such a situation.

Empty properties

Some properties, such as agricultural buildings, those used for training or the welfare of disabled people, and places of worship, are already exempt from business rates. All other properties must pay business rates when they are occupied.

If your property becomes vacant, whether it’s a retail outlet, residential home or office building, you are exempt from paying business rates for three months. However, at the end of this time, you will be required to pay the full amount of business rates to your local authority, as usual.

It’s important to note that the exemption from business rates applies to the property, not to the person who owns it, so if you sell your commercial property during the three month period of grace or buy one during that time, it does not begin again with the new owner.

Exemptions

The owners of some categories of buildings are able to apply for a further period of ‘empty property relief’ as it’s known. These include industrial premises (which can extend the exemption period for a further three months), listed buildings (until someone occupies the premises), buildings whose rates are less than £2,600 per year (again, until they are reoccupied), buildings owned by charities (if the next tenant is continuing the charitable theme) and buildings which are occupied by community charitable sports clubs (if the tenants continue to run a sports club).

In addition, since October 2013, unoccupied commercial new builds are exempt from non-domestic rates for a period of up to 18 months, provided it has been registered on the Ratings list before September 2016, in order to stimulate construction and thence the economy of the UK.

Applying for exemption

To apply for exemption you must contact your local authority or council and fill in an application form. They will then usually send out an assessor who will verify that the building is indeed empty and the exemption will then apply. The timing of your application is crucial as some local authorities will not allow you to backdate your application and will only grant exemption from the time you notify them. In order to maximise your rates-free period, therefore, it’s important to notify them as soon as possible, preferably before the building becomes vacant.

If you need guidance about applying for exemption from business rates, or any other matter relating to the subject, contact a member of our team. We can offer you advice and up-to-date information which may help you save money in the long run.

Written by: Craig Newton on Monday 22/05/2017

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