When it comes to running a business, there are countless expenses that need to be considered. From rent and utility bills to salaries and inventory costs, the list of financial obligations can seem never-ending. One such expense that often catches business owners by surprise is void business rates. These rates can add a significant burden to a company’s bottom line if not properly understood and managed.
What are void business rates?
Void business rates are essentially taxes that are levied on commercial properties that are unoccupied for a certain period of time. In the UK, these rates are charged to property owners by local authorities in an effort to discourage vacant properties and stimulate economic activity. The idea behind void business rates is to prevent property owners from leaving their properties empty for extended periods of time, as this can have a negative impact on the surrounding area and local businesses.
How are void business rates Calculated?
Void business rates are typically calculated based on the rateable value of the property in question. The rateable value is determined by the Valuation Office Agency (VOA) and is based on factors such as the size, location, and condition of the property. Once the rateable value has been established, the local council will apply a multiplier to calculate the final amount owed in void business rates.
It’s important to note that void business rates are usually charged at a higher rate than normal business rates. This is meant to serve as a disincentive for property owners to leave their properties unoccupied for long periods of time. The exact amount of void business rates will vary depending on the specific property and its location, so it’s important for business owners to be aware of this potential cost when considering leasing or owning commercial space.
How Can Business Owners Avoid void business rates?
While void business rates can be a significant financial burden for business owners, there are steps that can be taken to avoid or minimize these costs. One option is to negotiate a rent-free period with the landlord when leasing a new commercial property. This can help to offset the cost of void business rates during the initial period of occupancy and allow the business time to become established before incurring this additional expense.
Another option is to consider subletting a portion of the property to another business. By sharing the space with another company, business owners can help to reduce the amount of void business rates that they are required to pay. However, it’s important to check with the landlord and local authorities to ensure that subletting is permitted and that all necessary permissions are obtained.
Finally, business owners can also explore the option of taking out insurance to cover void business rates. There are insurance policies available that can help to safeguard against unexpected costs associated with unoccupied commercial properties. While this may involve an additional expense, it can provide peace of mind and protection against potentially significant financial losses.
In conclusion, void business rates are an important consideration for business owners who lease or own commercial property. Understanding how these rates are calculated and exploring strategies to avoid or minimize them can help to alleviate some of the financial burden associated with unoccupied properties. By being proactive and informed about void business rates, business owners can better manage their expenses and focus on growing their businesses.