Business Rates

Empty business rate changes

Changes to the business rate liability of empty and partly occupied properties which took effect on Tuesday 1 April 2008.

The Government has reformed empty property relief in order to provide a strong incentive to bring empty property back into use. This will help to increase the supply of premises to let, and so reduce business rents and improve the competitiveness of the UK.

It will also bring forward brownfield sites for re-development and so reduce the need for new development on environmentally valuable greenfield land.

The reforms to empty property relief have consequential impacts for the business rate liability of partly occupied properties that have been apportioned (known as a Section 44a agreement). The London Borough of Barking and Dagenham is required by central Government to implement these changes.

So what will this mean for my business rate liability?

As of Tuesday 1 April 2008, most property that has been empty for more than 3 months - or, in the case of industrial property, for more than 6 months - will no longer receive relief from the business rate.

After the initial 3 or 6 month rate-free period expires, empty property will be liable for 100% of the basic occupied business rate, unless it:

Qualifies for the new zero rate provided by the Rating (Empty Properties) Act 2007

From Tuesday 1 April 2008 the business rate liability of empty property that is held by a charity and appears likely to be next used for charitable purposes, or that is held by a community amateur sports club and appears unlikely to be next used for the purposes of the club, will be reduced from 10% of the basic occupied rate to zero.

Qualifies for an exemption from business rates under the national non-domestic rate (unoccupied property) regulations

While the current permanent exemption for industrial property will be reduced to 6 months, the Government proposes to preserve the majority of the other existing exemptions unchanged.

However, the Government is consulting on possible reforms to the exemption for empty property that is listed or subject to a building preservation notice; and on the possibility of extending the exemption from business rates for empty property held by companies in liquidation to that held by companies in administration.

How will my business rates liability be affected if my property is only partly occupied?

If a property is only partly occupied, the Council has the discretion to request that the Valuation Office Agency apportioned the property's rateable value between its occupied and unoccupied parts. This is known as a Section 44a agreement.

At present, broadly speaking, the empty property rate applies to the empty part of an apportioned building.

From Tuesday 1 April 2008, as a consequence of the reforms to empty property relief, the empty part will receive a complete exemption from business rates for the first 3 months it is empty (or, if it is an industrial property, for the first 6 months). After the initial rate-free period expires, in most cases the apportionment will cease to have effect and the occupied business rate will apply to the whole property.

This will ensure that occupiers can benefit from any occupied business rate relief to which they are eligible - such as small business rate relief - on the whole of the property, not just the occupied part. However, if the property would qualify for the new zero business rate or for an exemption from business rates when empty, the apportionment will continue to have effect and the owner will not be liable for business rates on the empty part.

Can I appeal against the change in my business rates liability?

The changes in business rate liability arising from the reforms to empty property relief are not in themselves grounds for appeal.

However, if you disagree with the rateable value that appears in the current rating list entry for your property, under the existing arrangements you may challenge it by making a 'proposal' against it to the Valuation Office Agency.

Your rights of appeal are not affected by the reforms to empty property relief and you can contact this authority or the Valuation Office Agency for further information about the arrangements for making proposals.

Further information regarding the changes to empty rate legislation is available on the Valuation Office website.