When a property becomes substantially empty it is exempt from business rates for 3 months, except certain industrial properties which are exempt for 6 months. At the end of the rates-free period, the property will be subject to a 100% basic occupied business rates charge.
It is important to note that the rate-free period applies to the property only. A change in ownership, lease or tenancy does not start a further rate-free period. Therefore, if you purchase an empty property, you will immediately be liable for 100% business rates if the property has been vacant for more than the rate-free period prior to you buying it.
The liability for empty property rates rests with the "person (or company) entitled to possession". This could be the tenant, leaseholder (if there continues to be a valid tenancy or lease) or the owner of the property.
To qualify for a new exemption period, the property must have been occupied continuously for 13 weeks prior to it being vacated again.
After the 3 or 6 month rate-free period expires, the empty property attracts a 100%
basic occupied business rate charge unless:-
- The rateable value of the property is less than a specified amount, currently £2,900.
- The owner is prohibited by law from occupying the property or allowing it to be occupied.
- The property is kept vacant because of action taken by or on behalf of the Crown, or any other local or public authority, to prohibit occupation of the premises or acquisition of them.
- The property is included in the schedule of monuments compiled under s.1 to the Ancient Monuments and Archaeological Areas Act 1979.
- The property is the subject of a building preservation notice within the meaning of the Planning (Listed Buildings and Conservation Areas) Act 1990 or is included in a list compiled under section 1 of that Act.
- The owner is entitled to possession only in his capacity as the personal representative of a deceased person.
- One of the following insolvency or debt administration situations exists:
- A bankruptcy order within the meaning of section 381 (2) of the Insolvency Act 1986.
- The owner is entitled to possession of the property in his capacity as trustee under a deed of arrangement to which the Deeds of Arrangement Act 1914 applies.
- The owner is a company subject to a winding-up order made under the Insolvency Act 1986 or which is being wound up voluntarily under that Act.
- The owner is entitled to possession of the property in his capacity as liquidator under s112 or s145 of the Insolvency Act 1986.
- The owner is a company in administration under the Insolvency Act 1986 or is subject to an administration order.
There are also no business rates to pay on an empty property if:
- It is held by a charity and appears likely to be next used for charitable purposes.
- It is held by a community amateur sports club and appears likely to be next used for the purposes of the club.
It is important that you tell us of any change that affects your liability to pay rates.
Partly occupied property
If a property is only partly occupied, the Valuation Office Agency (VOA) may be able to value the occupied and unoccupied parts of the property separately. The unoccupied part would then be eligible for Empty Property Rate Relief.
If the VOA is unable to value the parts separately and the property is to remain partly occupied for a short period of time only, you may be eligible to claim Part Occupied Relief.
Completion Notices
A completion notice is a document that specifies the ‘completion date’ – this is the date of which commercial premises become rateable and enter the rating list for business rate purposes.
A completion notice can be issued in respect of:
- a newly constructed building
- an existing building which has been split or merged
- a building that, although not new, has been temporarily unoccupiable due to a refurbishment or alteration
For more information, please read the Completion Notices Explanatory notes.