December 2010: The Government has announced that it proposes cutting empty rates relief for small business properties. The Coalition Government intends to lower the exemption threshold to £2,600 from 1st April 2011 in a move that could net the Treasury £400 million.
Currently vacant business properties with a rateable value of less than £18,000 are exempt from paying business rates. It is proposed that from the 1st April 2011, this threshold will be reduced to £2,600. The majority of the properties affected by the announcement will be in areas that are already economically disadvantaged.
From 1 April 2009 until 31 March 2010 a special exemption from rates was given for all empty properties with a 2005 rateable value under £15,000. This was then extended for 2010/11 so that all empty properties with a rateable value below £18,000 are exempt. A significant number of properties with rateable values below £18,000 remain vacant. The likely rates liability on a vacant property with a rateable value of £17,500 would be approximately £7,490.
Empty property rates are a controversial tax on individuals and companies on assets that generate no income. Property owners are not deliberately keeping premises vacant. It is a reflection of the state of the market and reduced demand due to economic circumstances. The extension in December 2009 to increase the relief up to rateable value £18,000 was only for 12 months. However, as economic circumstances have not improved dramatically, the proposed move has been seen as mistimed. Allen Evans, Partner