When it comes to running a successful business, there are many costs that entrepreneurs need to consider. From rent and utility bills to salaries and marketing expenses, the list can seem never-ending. However, one cost that often flies under the radar but can have a significant impact on a business’s bottom line is business rates on empty shops. As brick-and-mortar stores struggle to stay afloat in an increasingly digital world, the burden of business rates on empty shops is becoming a pressing issue for both owners and local authorities.
Business rates, also known as non-domestic rates, are a tax paid on non-residential properties in the UK. The amount a business pays is determined by the rateable value of the property, which is set by the Valuation Office Agency. However, what many businesses don’t realize is that even if a property is empty, they may still be liable to pay business rates.
The rationale behind charging business rates on empty shops is to prevent property owners from leaving their properties vacant for extended periods, as this can have a negative impact on the local economy and community. By incentivizing property owners to bring their empty shops back into use, local authorities hope to revitalize high streets and attract more businesses and shoppers.
However, this policy has drawn criticism from small business owners and entrepreneurs who argue that it unfairly penalizes those who are struggling to keep their businesses afloat. In times of economic uncertainty and changing consumer habits, many businesses are finding it increasingly difficult to compete with online retailers and larger chains. As a result, they may be forced to shut down their shops, leaving them empty and burdened with business rates they cannot afford to pay.
The impact of business rates on empty shops is not just financial. It can also have wider implications for the local community. Empty shops can detract from the overall appearance of a high street, making it less attractive to shoppers and deterring potential investors. This can create a domino effect, leading to a decline in footfall, further shop closures, and a general sense of neglect in the area.
To address these concerns, some local authorities have introduced initiatives to help businesses struggling with empty premises. For example, they may offer temporary rates relief or funding to help property owners refurbish their shops and attract new tenants. These measures can provide much-needed support to businesses during tough times and encourage them to invest in their premises, rather than leaving them empty.
In addition to local initiatives, the government has also taken steps to address the issue of business rates on empty shops. In the 2018 budget, Chancellor Philip Hammond announced plans to reduce the burden of business rates on small businesses by cutting rates for properties with a rateable value of less than £51,000. While this was a step in the right direction, many business owners argue that more needs to be done to support struggling businesses and revitalize high streets.
One proposed solution is to introduce a more flexible approach to business rates on empty shops. Instead of charging a flat rate, local authorities could consider reducing rates for businesses that are actively seeking tenants or investing in their properties. This would incentivize property owners to bring their empty shops back into use, rather than leaving them vacant to avoid paying rates.
Another idea is to link business rates to turnover, rather than the rateable value of the property. By basing rates on a business’s actual income, rather than a fixed property value, businesses would be more fairly assessed and could avoid being penalized for factors beyond their control, such as changing market conditions or consumer trends.
Overall, the issue of business rates on empty shops is a complex one that requires a balanced approach from both businesses and local authorities. While it is important to encourage property owners to bring their empty shops back into use, it is equally crucial to support businesses that are struggling to survive in a challenging economic climate. By working together and exploring innovative solutions, we can create vibrant high streets that benefit both businesses and the wider community.