A new empty property rate relief for newly built commercial building, due to become available next month, will give the construction sector renewed confidence Local Government Minister Brandon Lewis said today (11 September 2013).
This new incentive is worth an estimated £150 million and could benefit over 11,000 new commercial properties including warehouses, offices and factories.
The discount was announced by the Chancellor in his Autumn Statement to encourage development by reducing the business rates liability of owners of unoccupied new buildings.
Guidance published today sets out the detailed criteria and eligibility for this additional relief for empty new builds. It will help local authorities and businesses understand and successfully use the discount.
The change builds on other steps the government has taken to help firms with their business rate liabilities - including doubling small business rate relief for 3 years benefiting half a million properties. The introduction of the Employment Allowance, which will see 450,000 of the smallest businesses paying no employers national insurance contributions at all and reforms to the main rate of Corporation Tax will mean that, from April 2015, the UK will have the lowest rate of Corporation Tax in the G20.
Brandon Lewis said:
This move will boost confidence in the commercial property sector and allow them to develop new projects again without worrying about the risk of rate bills on empty buildings whilst they find a buyer.
This is the latest in a series of decisions by the government to address business rate concerns, help stimulate the construction industry and encourage economic activity across the country.
Exchequer Secretary to the Treasury, David Gauke, said:
This government is committed to supporting business and encouraging growth. We want to provide targeted support, where it is most needed, and it is hoped the empty property rates relief will incentivise the construction industry by reducing risk.
We have taken a number of steps – including introducing an Employment Allowance, extending the small business rates relief and reducing the main rate of Corporation Tax – that will stimulate growth in the economy and ensure the UK remains a competitive place in which to grow and do business.
- Business rates are charged on most non-domestic properties such as warehouses and shops including when empty (following an initial 3 month rate free period).
- The relief will apply to properties completed between 1 October 2013 and 30 September 2016 that are not occupied, during the first 18 months after construction.
- Construction decisions currently take into account the risk of paying empty property rates on newly-built commercial sites if the development does not become fully occupied straight away. Instead the government will fund authorities to provide 100% relief where buildings meet the specified criteria.
- A simple example is a new build office that is unoccupied from the date it is completed for 18 months. In such a circumstance the ratepayer would not be required to pay rates for the first 3 months under the 2008 Regulations and then would benefit from 15 months new build empty property relief provided through section 47 of the Local Government Finance Act 1988.
- The government will not change the rules on when a property becomes liable for empty property rates. It instead intends to reimburse local authorities that use their discretionary powers to provide relief from business rates in the circumstances set out in the consultation.
- The government has also doubled small business rate relief from October 2010 until April 2014, to help an estimated half a million small firms and shops. Small firms are receiving 100% rate relief (ie pay no business rates at all) on properties up to £6,000 rateable value, and a tapered rate relief from £6,000 to £12,000.
- In addition, the Localism Act 2011 has made it easier for small firms and shops to claim small business rate relief, by ensuring all eligible ratepayers can automatically receive the small business multiplier, and has removed the legal red tape requiring ratepayers to fill in paperwork to claim the relief.