Navigating Business Rates: A Guide To Landlord and Charity Discounts
Understanding Business Rates
In the United Kingdom, business rates are a significant financial consideration for landlords and property owners. These rates are a form of local property tax levied on non-domestic properties including commercial spaces, offices, factories, and warehouses. The local government uses the revenue generated from business rates to fund various public services such as education, transport and infrastructure.
Business Rates in England & Wales are calculated using the rateable value of the property. This value is the market rate for the property on a given day as defined by the UK Government’s Valuation Office Agency (VOA). Once you know your rateable value, you can calculate business rates by taking that value and applying the appropriate published multiplier.
Let’s share an example. John has a business in England. The rateable value of his business property is £10,000, so he uses the 2023 to 2024 small business multiplier (49.9 pence) to estimate his business rates as £4,990.
Business or ‘non-domestic’ rates are calculated in a similar way, however, different ranges and multipliers are used.
In both systems, small businesses may be entitled to some form of additional relief. It always pays to get professional advice.
Business Rates: Landlords and Empty Properties
For landlords, business rates are a crucial aspect of financial planning. The rates are calculated based on the rateable value of a property which is an estimate of its open market rental value on a specific date. This value is reassessed every few years to reflect changes in the property market. In general, the occupier or tenant is liable for business rates however clarity on payment ought to form part of a lease agreement. One of the key challenges faced by landlords and property owners, however, is that they are responsible for paying business rates for unoccupied properties. There are certain exemptions and reliefs available but tax will still need to be paid.
To navigate the complexities of business rates, landlords often seek professional advice. A proper understanding of the rates system enables landlords to factor these costs into their rental charges, ensuring their businesses remain financially viable. Moreover, staying informed about changes in business rate regulations is essential as alterations in government policies can significantly impact landlords and property owners, influencing their investment decisions and overall financial stability.
Business Rates: Charity Relief
Do charities pay business rates? Normally, charities are entitled to business rates relief of up to 80% off the bill which helps alleviate the financial burden on their operations. Full relief is provided for properties that are wholly or mainly used for charitable purposes, such as not-for-profit offices, charity shops and community centres.
Charitable organisations may also benefit from discretionary relief, where local authorities have the power to reduce business rates for specific properties, further supporting the charity sector. However, the rules surrounding business rates for charities can be complex, requiring a nuanced understanding of the eligibility criteria and application process. The good news is this is a subject we know well and can happily provide advice on.
Charities often rely on these reliefs to allocate their resources efficiently, ensuring that funds are channelled towards their core missions and community-oriented initiatives rather than being diverted to business rates payments. Charities must stay informed about the evolving regulations related to business rates, enabling them to maximise their relief entitlements and optimise their financial planning. By understanding and leveraging these provisions, the charity sector can continue to make a positive impact on communities across the UK.
In summary, business rates are a fundamental consideration for landlords and charities. Being aware of the rateable value, exemptions, and reliefs available to a non-domestic property is vital. As is staying updated on legislative changes that might impact your financial planning.
ASTOP’s Ethical Approach to Business Rates Relief
ASTOP’s approach to Business Rates Relief is simple, low-risk, legal and proven. If you invite a qualifying charity to occupy an empty building, the business rates burden is reduced to 20% of the normal rate you, as the owner or landlord, would be asked to pay. This is a special rate only available to genuine charities and social causes using your space and equates to an overall net saving of 50%.
The good news is, through the standard ASTOP agreement, this reduced rate applies throughout the occupancy, with no qualifying period or set-up time. This is true even if the charity tenant is on a short-term month-by-month contract with a provision for immediate vacation should the property be re-let commercially.
Local government is usually keen to support the charity sector and reduce the impact of empty properties in their areas. They typically support and champion charity Business Rate reductions. Our approach has been accepted by over 100 local authorities to date. Councillors and MPs across the UK political spectrum have publicly acknowledged our successes. Unlike the highly bureaucratic “in and out” rates mitigation alternatives, which councils now frown upon, our landlord-charity partnerships are widely accepted as the most ethical form of rate reduction.
Many arguably unethical alternatives might appear to achieve higher savings, but at what reputational cost? Some are currently the subject of pending legislation to curb their activities too.
Applying for business rate relief as, or on behalf of, a charity is relatively straightforward although the process varies from local authority to local authority. It is certainly legal and considered standard practice for any property which is wholly or mainly used for charitable purposes. In the case of a charity using an unoccupied commercial property temporarily, relief still applies for the tenancy agreement’s duration.
The Benefits Of Charity Business Rate Relief for Landlords
Charity Business Rate Relief, a program designed to directly support charitable organisations, can have multifaceted benefits for commercial landlords too.
Partnering with a charity not only fosters a culture of giving back, typically aligned with an organisation’s CSR policy, but it also brings an important financial advantage should a property, at any time, be unoccupied. This is because owners of empty offices and commercial buildings are liable for full Business Rates for the period of non-occupancy. By providing considerable rate relief to the charity sector, the UK Government has therefore created an ethical financial incentive to encourage landlords to invite charities to use their empty spaces.
By supporting charitable endeavours, landlords can claim relief on the business rates applicable to their properties which equates to a net reduction of 50% in local taxes. This significantly reduces the financial burden of having an empty property on their books. The work ASTOP does means these savings apply from day one of the charity tenancy. The nature of these agreements is typically short-term. It may be that the property is re-let quickly to a commercial tenant, in which case the business rate relief may only have applied for a short while. Still, every penny counts.
In summary, Charity Business Rate Relief not only encourages landlords to engage with charitable organisations but also provides financial relief, enhances community vitality, boosts reputation, and fosters long-term, stable tenancies. Embracing this initiative can transform properties into hubs of social good while ensuring landlords enjoy a range of benefits that positively impact their bottom line and community standing.
Business Rate Charity Relief Example
We have arranged charity occupation of a huge number of buildings for a wide range of landlords, agents and property owners. Thanks to the ASTOP approach, each benefitted from a reduced business rate with minimum red tape and delay. As we have no qualifying period, our team arranges savings from day one.
Specific examples include work for Barclays Bank, Debenhams and Marks & Spencer. For each, we arranged charity ‘take-overs’ of empty and disused branches, offices and warehouses. As such places often have a high rateable value, the savings we arranged were significant. In the case of Marks & Spencer, several charities worked cooperatively to make the best use of a large department store-sized space. In partnership with Temporary Use Aid, ASTOP successfully launched the Rainbow Rising development programme. This is a unique concept closely aligned with local businesses, local government and local communities. Despite a major store closure, footfall in the area has remained high and at times even increased. The property has been very well looked after and maintained too. Alongside this, ASTOP successfully achieved the maximum business rate relief allowed for the landlord and delivered net savings of 50%.
Partner With ASTOP: For Business Rates Charity Support
Contact us to discuss how we can help, discuss similar projects or ask any questions you might have. By choosing ASTOP as your partner, you open the door to a myriad of opportunities to save money and make a difference in the world. We are excited to share the journey with you.