When it comes to running a business, there are various expenses that need to be taken into consideration. From payroll to rent, utilities, and insurance, the costs can quickly add up. One expense that many business owners may not be as familiar with is void business rates. These rates can have a significant impact on a company’s bottom line, so it’s important to understand them and how they are calculated.
What are void business rates?
Void business rates, also known as empty property business rates, are a type of tax that is levied on commercial properties that are vacant. In the United Kingdom, for example, business rates are calculated based on the rateable value of a property. If a property is vacant for a certain period of time, the owner may be required to pay void business rates at a reduced rate.
The purpose of void business rates is to encourage property owners to keep their properties occupied and in use. By levying this tax on vacant properties, local governments hope to discourage property owners from leaving their properties empty for extended periods of time.
How are void business rates Calculated?
Void business rates are typically calculated based on the rateable value of a property. This rateable value is determined by the Valuation Office Agency (VOA) and is used to calculate the amount of the business rates that a property owner will be required to pay.
In the United Kingdom, for example, properties with a rateable value of less than £2,900 are exempt from business rates altogether. For properties with a rateable value between £2,900 and £51,000, business rates are calculated using a formula that takes into account the rateable value, the size of the property, and the current multiplier set by the government.
If a property is vacant for a certain period of time, the property owner may be required to pay void business rates. The length of time that a property can be vacant before void business rates are levied varies depending on local regulations.
For example, in England, properties are exempt from void business rates for the first three months that they are vacant. After three months, the property owner will be required to pay 50% of the full business rates. After six months, this rate increases to 100% of the full business rates.
How Can Business Owners Minimize void business rates?
There are several strategies that business owners can use to minimize void business rates. One common approach is to negotiate with local authorities to reduce the void business rates that are levied on a property. Some local authorities may be willing to offer discounts or incentives to property owners who keep their properties occupied.
Another strategy is to actively market a vacant property in order to find new tenants as quickly as possible. By minimizing the amount of time that a property is vacant, business owners can reduce the amount of void business rates that they are required to pay.
It’s also important for business owners to keep detailed records of the time that a property has been vacant and any efforts that have been made to find new tenants. By keeping thorough records, property owners can provide evidence to local authorities that may help them negotiate lower void business rates.
In conclusion, void business rates are an important expense that property owners need to be aware of. By understanding how these rates are calculated and taking proactive steps to minimize them, business owners can reduce their financial burden and keep their properties occupied. Whether it’s negotiating with local authorities, actively marketing a vacant property, or keeping detailed records, there are several strategies that business owners can use to minimize void business rates and protect their bottom line.