Avoid Business Rates on Empty Properties You Know It Makes Sense

At #TeamCES, we like to look after our clients, and in these unprecedented times, we know just how much every penny counts for businesses of all kinds.

Business Rates are a huge financial burden at the best of times, but when properties lie unoccupied and without any viable tenants for the foreseeable future, paying those business rates can seem a lot like throwing money down a well that has long run dry.

On non industrial properties, landlords are expected to pay full business rates 3 months after a tenant has left, with this time period extending to 6 months on industrial properties.

Obviously, with the lasting economic impact of the pandemic, finding viable tenants is going to become increasingly difficult, and it is expected that many landlords will find themselves having to cover the business rates on their properties themselves, when it would be the tenants who would usually be obliged to pay.

So, how can this be avoided?

You have to know the rules well enough to use them to your advantage…

…but we’ll give you the breakdown here, as best we can.

Firstly, some properties are completely exempt from paying business rates, such as agricultural properties, churches and buildings that are registered as ‘religious buildings’. Other types include those that are designated for the welfare of disabled people.

Secondly, some buildings become exempt from business rates once they are unoccupied. Pay close attention here, as the devil is in the detail.

Empty listed buildings, empty buildings owned by registered charities and empty buildings owned by amateur sports clubs all become exempt once empty, but only if their purpose maintains in the future.

Finally, a few other reasons that may exempt a building from business rates include if the property owner has been declared bankrupt, if the property is unfinished or untenable due to disrepair, if the property is owned by a company that is in administration, and if the owner has been granted possession of the property in the capacity as a trustee.

So, how can you use this information to your benefit, to avoid paying business rates on properties that are becoming a financial burden due to the effects of coronavirus?

It’s a good question, and here are some of the best answers, solutions, or loopholes that we know of.

Call them what you want, they could help you out big time in the short to medium term, until this whole crisis actually starts to get better, whenever that may be.

If you do nothing, you can expect to assume full responsibility for the business rates in between 3 and 6 months, so time is of the essence.

You could:

  • Find Short Term Tenants – this is tricky, but can be repeated multiple times. It has to be proven that the arrangement is beneficial to the tenant though…

  • Become Owner Occupier – again, this can be repeated and as long as the landlord is a listed resident for at least 6 weeks, the exemption period starts again upon them ‘leaving’.

  • Let to Charity – Charities only have to pay 20% of the full business rates. A no brainer If you can find the right charity at the right time.

  • Demolish the Building – Last case scenario? Maybe. Best case scenario? That’s up to you.

Use these loopholes wisely, but use them before they are closed. Government will be looking to chase up as much money as they can in the coming months. Don’t get punished.

That’s our advice.


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