Changes to modernise empty property rates, which came into effect on 1 April 2008, aim to provide strong incentives to bring vacant premises back into use by removing reductions to the business rates bill.
For most properties, the unoccupied exemption period is three months. For industrial properties, the unoccupied exemption period is six months.
Properties with a rateable value less than £2,900 are exempt from unoccupied property rates.
Properties owned by charities and community amateur sports clubs are not liable to empty property rates, if the property's next use is likely to be wholly or mainly for charitable purposes.
A property becomes liable to unoccupied rates when on any day all of the conditions set out below are fulfilled.
- The whole of the property is unoccupied
- The person who is liable to pay the unoccupied property rates is entitled to possession of the whole property
- The property is shown in the local rating list in force for the year
- Regulations do not provide for the property to be exempt from empty property rates
Local Authorities do not have discretion to vary the percentage of unoccupied property rates chargeable, or to exclude classes of property from liability.
There are however, some classes of non-domestic properties which are exempt from liability to pay unoccupied property rates. These are where the conditions below apply:
A) Property unoccupied for a period not exceeding three months or six months if an industrial or warehouse property
A property is exempt from unoccupied rates on a day if, on that day, it has not been continuously unoccupied for a period of three months or six months in the case of an industrial or warehouse property. For the purpose only of determining whether a property has been continuously unoccupied, any period of occupation of less than six weeks is disregarded. A period of occupation of less than six weeks which extends beyond or takes place after the three or six month period does not trigger a new three-month period of exemption. The occupier of the property is liable for full occupied rates during such period of occupation.
B) Occupation prohibited by law
Property is exempt on any day that its owner is prohibited by law from occupying it or allowing it to be occupied.
C) Kept vacant by reason of action taken by the Crown or any local or public authority
A property is exempt on any day that it is kept vacant due to action taken by the Crown or any local or public authority to prevent occupation or acquire the property.
D) Listed buildings
A property is exempt on any day that it is the subject of a building preservation notice as defined by Section 58 of the Town and Country Planning Act 1971 or is included in a list compiled under Section 54 of that Act.
E) Scheduled ancient monuments
A property is exempt on any day that it is in the Schedule of Monuments compiled under Section 1 of the Ancient Monument and Archaeological Areas Act 1979.
F) Small properties
Properties with a rateable value of less than £2,899 (with effect from 1 April 2011).
G) Possession only as a personal representative, liquidator etc.
A property is exempt if the person entitled to possession of it holds it only as a personal representative of a deceased person, a liquidator or trustee under a deed of arrangement or where the owner is the subject of bankruptcy proceedings.
If your property is not capable of beneficial occupation - for instance, if it is in poor condition and cannot be economically repaired - the Valuation Office Agency may judge that it should be taken out of the rating list altogether. Please be aware that if the state of your property is damaged for the purposes of avoiding rates, under new anti-avoidance legislation introduced by the government, the valuation officer will be required to disregard the change in the property's state when assessing its rateable value. For example, if the roof is removed from an empty property for the purpose of avoiding rates, it may be valued as if the roof had not been removed.
If a property is only partly occupied, the billing authority has discretion to request that the valuation office apportions the property's rateable value between its occupied and unoccupied parts.
After the initial unoccupied exemption period expires, in most cases the apportionment will cease to have effect and the occupied business rate will apply to the whole property.