Navigating New Rules on Industrial Rates Relief
We know new rules came into force on April 1st, but you’d be foolish not to take the new business rate rules for empty industrial spaces seriously. The team at ASTOP has prepared a video summarising the changes to keep you up to date and help you save money. It shares the new legislation’s impacts on the empty rates mitigation options for industrial spaces in England. The Government announced them on the same day as the March 2024 budget following 2023’s Consultation on Property Tax Avoidance and Evasion.
Our short video, shared on the right and created by a panel of industry experts, illustrates industrial empty rate mitigation options in three broad categories: ineffective options, options for when the industrial space is already empty, and the best often forgotten option, which is to ensure your industrial space is not empty in the first place.
In the video, given ASTOP’s services, we suggest ways to do this by engaging with the commercial and charity sectors.
New 2024 Empty Industrial Space Rates Relief Rules
Although it was not part of the March 2024 budget speech itself, UK Government paperwork issued on the same day confirmed a widely anticipated change that aligned England with rules that had been in place in Scotland and Wales for two years. As of April 1st, any English industrial property owner with empty space is burdened with 100% business rates for three months (13 Weeks) before they can trigger a 6-month exemption. Before the rule change, the exemption duration would have been less than half, at just six weeks.
This one-third additional cost, together with additional anti-avoidance rules expected imminently, means intermittent occupation has become far less attractive, especially compared to more ethical and palatable options we can help with.
Why the Government Changed Rate Relief Rules
In its paper, the government deemed existing intermittent short-term ‘box-shifting’ to avoid business rates unacceptable. Responsible for councils missing out on 80% of industrial empty rates revenue, it squeezed council critical services to an unpopular and unethical degree to public and political sentiment.
Following the rule change, occupation by ‘box shifting’ now has to be for three months before £1 is saved. Due to charges, any savings achieved by using a ‘box-shifting’ agent also drop by a fifth from 64% to 53%. These figures come from present rules. Future expected rule changes may make savings even harder to achieve.
100% Ethical Empty Rates Mitigation For UK Tax-Payers
The role of the charity and community sector is growing in society, especially in today’s harder economic times. At the same time, the rules around industrial rate mitigation and good causes remained untouched by the 2023 consultation and rule changes made in April 2024.
Working with charities and good causes stands out as the front-runner among the choices available to landlords and operators with excess space. The video illustrates that savings of at least 55% from day one are achievable this way compared to leaving an industrial space empty.
The government has been supportive of the charity sector for decades now, so in addition to this saving, UK tax-paying industrial landlords benefit, in kind, in essence, from a retrospective tax deduction after 365 days. This typically doubles the savings from 55% to 100% over a year. The ASTOP option costs zero.
Even if you don’t pay UK tax, the 55% savings outperform other schemes.
Industrial Rate Relief Comparison Between Charities & Box Shifting
In the video, we compare box-shifting rate mitigation strategies with an agent. You would incur 100% empty rate costs for the first 91 days of non-occupation before getting relief for 182 days. During those 182 days, you would typically pay the agent 20% of any savings, too. Then, the cycle simply repeats. The video also highlights the significant increase in costs of this approach following the 1st of April 2024 rule changes, proving it is no longer competitive.
There is a hypothetical option for businesses fortunate enough to have spare space, excellent diary management skills, in-house zero-cost teams available to move items every three to six months, and the resources to fight councils who resist. Again, in the video, we prove that, even with all these things in place, there is only a one-in-four chance this will outperform the charities option. As discussed above, this drops to zero in four you choose to use an agent.
The UK Government changes, as of April 1st, 2024, mean industrial landlords facing empty space have a significantly more compelling financial case to work with charities and good causes.
Benefits Of Empty Industrial Rates Relief Through Community Projects
It is important to note that landlords working with charities and good causes retain flexibility and can typically terminate relationships at any time, penalty-free, with just a month’s notice.
Industrial landlords in Scotland and Wales have found that their insurance costs are lower when charities occupy a space than intermittent box shifters. Buildings are better and more securely maintained with the lights on and activity in your industrial spaces. Potential new tenants tend to show more interest, and if a squatting attempt occurs, police are known to be more responsive when your building is helping a charity.
Overall, landlords and developers who are conscious of the long game regarding their valuable assets enjoy savings and reassurances from positive relationships with stakeholders such as local residents, council departments, and planning authorities.
At ASTOP, we have years of experience, significant expertise, and an extensive network of contacts across the charity, community, and good cause sectors. We can help industrial spaces mitigate 100% of their empty rates with an ethical solution supported by local and national government. Since the April 1st rule changes in England, our solution is more clearly the most cost-effective option for empty industrial spaces.
