Since April 1st 2020 all retail, leisure and hospitality companies have been exempt from paying rates – but this does not apply to vacant properties.
Whilst the Government has enacted a number of policies designed to reduce the impact of Coronavirus on the commercial property industry, it’s apparent that there is little in the way of support for landlords of vacant properties.
This is especially clear with regards to the business rates holiday for the retail, leisure and hospitality sectors.
In the Government’s guidance to local authorities on this matter, it’s made explicit that vacant properties in these sectors are still liable for full business rates.
In short, in order to qualify for 100% rates relief a premises must perform a function relevant to the retail, leisure or hospitality sectors (pages 5 to 7 list examples) and must be accessible to visiting members of the public.
Example 8 confirms that a vacant property will be liable for business rates following the typical 3 month free period:
Example 8: A shop with a rateable value of £40,000 (example 1) but only occupied until 30 September 2020
Gross rates (before any reliefs) = £40,000 x 0.499 = £19,960
Expanded Retail Discount (100%): = -£19,960
Rates due p.a. (after Expanded Retail Discount): = £nil
Daily charge while occupied : = £nil per day
Occupied charge 1/4/20 to 30/9/20 (183 days): = £nil
Unoccupied property relief (1/10/20 to 31/12/20): = £nil
Unoccupied property rates (1/1/21 to 31/3/21), £40,000 x 0.512 x 90/365 = £5,049
Rates due for the year (after Expanded Retail Discount): = £5,049
This leaves many commercial property owners stuck between a rock and a hard place: either find a tenant in an increasingly turbulent market, or shoulder the significant burden of business rates.
Whilst the government continues to update its policies, there remains one sure-fire way to to reduce the significant burden of business rates – rates mitigation.
Click here to find out how Fuse Media’s WiFi-Based Rates Mitigation Scheme can help save you money.
Sources:
https://www.legislation.gov.uk/ukpga/2020/7/part/1/crossheading/business-tenancies-protection-from-forfeiture-etc/enacted
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/897901/Code_of_Practice_for_commercial_property.pdf
https://www.gov.uk/government/publications/business-rates-retail-discount-guidance
