When it comes to running a business, there are a multitude of expenses that business owners must consider. From payroll and inventory costs to marketing and operational expenses, the financial burden can be overwhelming at times. One expense that often gets overlooked or misunderstood is void business rates.
Void business rates refer to the rates that a business owner is required to pay on an empty commercial property. These rates are imposed by the local government as a way to generate revenue and discourage property owners from leaving their properties vacant. While void business rates may seem like an insignificant expense, they can quickly add up and impact a business’s bottom line.
It is important for business owners to understand void business rates and how they can impact their finances. In this article, we will discuss what void business rates are, how they are calculated, and strategies that business owners can employ to reduce or avoid these rates.
What are void business rates?
Void business rates are taxes that are levied on empty commercial properties. These rates are charged to the owners of vacant properties in order to encourage them to either rent out the property or sell it. Void business rates are typically set at the same rate as the standard business rates that would be charged if the property were occupied.
The rationale behind void business rates is to prevent property owners from leaving their buildings empty for extended periods of time. By imposing these rates, the government aims to incentivize property owners to make productive use of the property, whether by renting it out to tenants or selling it to someone who will.
How are void business rates Calculated?
Void business rates are calculated based on the rateable value of the property. The rateable value is an estimate of the yearly rental value of the property and is determined by the local government. Property owners are required to pay a percentage of the rateable value in void business rates for each day that the property remains empty.
For example, if the rateable value of a property is $50,000 and the void business rate is set at 50%, the property owner would be required to pay $25,000 in void business rates for each day that the property remains vacant.
Strategies to Reduce or Avoid void business rates
For business owners who are facing void business rates on their vacant properties, there are several strategies that can be employed to reduce or avoid these rates.
1. Short-term lets
One way to reduce void business rates is to consider renting out the property on a short-term basis. By finding temporary tenants or using the space for pop-up shops or events, property owners can generate income and avoid paying void business rates on the property.
2. Renovation and redevelopment
Another strategy to avoid void business rates is to undertake renovation or redevelopment projects on the property. By making improvements to the building or repurposing the space, property owners can demonstrate that they are actively working to bring the property back into productive use, which may result in a reduction or waiver of void business rates.
3. Negotiation with the local government
In some cases, property owners may be able to negotiate with the local government to reduce or waive void business rates. By explaining the circumstances that led to the property being vacant and presenting a plan for bringing the property back into use, property owners may be able to receive relief from void business rates.
Conclusion
Void business rates are an important consideration for business owners who own empty commercial properties. Understanding how void business rates are calculated and implementing strategies to reduce or avoid these rates can help business owners save money and make productive use of their properties. By taking proactive steps to address void business rates, business owners can protect their financial interests and ensure the long-term success of their businesses.