Everything you need to know about business rates mitigation

31 May 2019

Owning a commercial property can be a great way to make a profit. But during those periods where your property might be vacant for a few months, business rates can be a real pain. In this article, Propsellers will open up the topic of business rates, particularly business rates mitigation and relief — find out if you’re eligible to save money on your business rates!

Business rates

Business rates are charged on commercial properties, such as shops and factories, usually on a yearly basis. These rates are based on a building’s rateable value, which in turn, is reflective of its open market rental value. When your property is occupied, it is the occupier that often pays the business rates through their rent — the bill itself will have the occupier’s name on, however, so any legal action in the event of an unpaid rate goes to the occupier. But when your building is vacated, the business rates and the responsibility of paying them return to you, the landlord.

Sometimes, buildings that are exempt, or have a reduced rate on these charges, will find this has been applied automatically. But often, property owners will need to apply for this concession.

Examples of exempt properties

There are a number of properties that are exempt or can apply for a reduced business rate. In terms of vacant or exempt properties, there are two types of relief available.

Empty buildings relief

If your property has only recently been made vacant, you don’t need to pay business rates on it for three months. However, after this three-month period, most business properties will have to pay the full amount again.

Some business properties can apply for an extended relief of business rates after the initial three months though. For example, industrial properties such as warehouses have an additional three months of relief; properties owned by charities who will use the property for charitable purposes can extend their exemption; and community amateur sports club buildings, if the next use of the building will be mainly sports, can also extend their exemption.

Listed buildings and buildings with a rateable value under £2,900 are exempt until they are reoccupied.

Exempted buildings relief

Some commercial properties are entirely exempt from paying business rates. These include public religious worship buildings or church halls, properties that are used to help disabled people, and agricultural land and buildings. These aren’t a given though, and the rules for total business rate exemption is very strict — those that think their property meets the criteria need to reach out to the Valuation Office Agency service.

Other applicable relief for property owners

Hardship relief

Business rates bills can also be reduced with a hardship relief application. In order to be eligible for this relief scheme, you need to prove to the council that you would be in financial difficulties if you didn’t have this relief, and that receiving this relief would benefit the local people.

Sources

https://www.gov.uk/introduction-to-business-rates

https://www.gov.uk/apply-for-business-rate-relief/exempted-buildings-and-empty-buildings-relief

https://www.brent.gov.uk/business/business-rates/who-pays-business-rates/

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