In general, there will be no business rates to pay in the first three months that a property is empty. This is extended to six months in the case of certain industrial properties. After that, rates are payable in full unless the property is exempt from the unoccupied rates.
Are there any exemptions to this charge?
After the initial three or six month free period expires, the empty property will be liable for 100% of the basic occupied business rate unless:
- It is held by a charity and appears likely to be next used for charitable purposes
- It is held by a community amateur sports club and appears to be next used for the purpose of the club
- The rateable value of the property is less than £2,600 (with effect from 1 April 2011 to 1 April 2017)
- The rateable value is less than £2,900 (with effect from 1 April 2017)
- The owner is prohibited by law from occupying the property
- The owner is prohibited by action taken by the crown, or any other local or public authority from occupying the premises
- If the property is the subject of a building preservation notice within the meaning of the Planning (Listed Buildings and Conservation Areas) Act 1990, or is in a list under section 1 of that act
- The property is included in the schedule of monuments compiled under s.1 to the ancient monuments and archaeological areas act 1979
- The owner is entitled to possession only in his capacity as the personal representative of a deceased person
If the following insolvency or debt administration situation exists:
- A bankruptcy order within parts 8 to 11 of the insolvency act 1986
- The owner is a trustee under a deed of arrangement to which the deeds of arrangement act 1914 applies
- The owner is a company subject to a winding up order made under the insolvency act 1986
- The owner is entitled to possession of the property in his capacity as liquidator or administrator under s112 or s145 of the insolvency act 1986
A ratepayer is liable for the full non-domestic rate whether a property is wholly occupied or only partly occupied. Where a property is partly occupied for a short time we have the discretion to award relief in respect of any unoccupied part subject to state aid limits. For further guidance on state aid see www.gov.uk/state-aid.
To apply for this relief you must contact us as soon as partial occupancy begins. An inspection of the premises will be arranged to confirm the partial occupancy. You may also be required to provide a plan of the premises so that the Valuation Office Agency can accurately apportion the rateable value between the occupied and unoccupied areas.
Charitable rate relief
Charities are entitled to relief from rates on any non-domestic property that is wholly or mainly used for charitable purposes. Relief is given at 80% of the bill. Local councils have discretion to give further relief on the remaining bill subject to state aid limits.
Authorities also have discretion to give relief on all or part of any rate bill for properties occupied by certain non-profit making bodies subject to state aid limits.
Discretionary rate relief
The council has discretion to grant relief of up to 100% of the rates on properties occupied by certain non-profit making bodies, or in the case of registered charities entitled to 80% mandatory relief, to top the relief up to 100%. From 1 April 2012 the council may grant up to 100% relief to any ratepayer.
In deciding whether to grant discretionary relief, the council will look at the contribution that the organisation makes to the area. Consideration will also be given to whether services provided replace, enhance or supplement current council facilities and priority will be given to those organisations that benefit the local community specifically. The council must also have regard to the interests of its council tax payers when making its decision.
In making a judgement, officers will balance the interests of the individual ratepayer or small community against that of council tax payers in general, taking into consideration local factors, and whether the council’s financial position allows for a reduction to be made.
Examples of these factors would be:
- the impact on local employment of the potential decline or loss of existing business
- opportunities for local development and regeneration
- increased employment by encouraging businesses into the area
Central government initiatives
Following the enactment of the Localism Act 2011 which gave local authorities wider powers under s.47 of the Local Government Finance Act 1988 to grant relief, central government announced a number of relief initiatives to assist ratepayers using s.47 powers, with a view to reimbursing local authorities in full via Section 31 grants under the Local Government Act 2003.
The council will award relief to qualifying ratepayers in these circumstances in line with DCLG guidance, unless to do so would go against the council’s wider objectives for the local area. Application forms may not be required in all cases, and relief can be awarded automatically where officers are satisfied that the qualifying criteria has been met.
There are provisions allowing for 80% mandatory rate relief to be granted to sports clubs that have registered with the Inland Revenue as community amateur sports clubs (CASC). In addition CASCs benefit from a range of tax reliefs.
You are likely to be successful in applying for registration if you can answer 'yes' to all of the following questions:
- is membership of the club open to the whole community?
- are all club facilities available to all members without discrimination?
- does the club's constitution prevent club profits being distributed amongst its members?
- does the club provide facilities for, and to encourage, participation in an eligible sport?
- does the club's constitution provide that on dissolution of the club, any net assets are to be applied for approved sporting or charitable purposes?
For further information see the GOV.UK CASC website.
The scheme provides for rate relief for those businesses in small settlements in rural areas with a population below 3000, and consists of two elements:
50% Mandatory relief is applicable to:
- The sole general store, a food store and the sole post office in a qualifying settlement, whose rateable value is less than £8,500
- The sole public house and the sole petrol filling station in a qualifying settlement, whose rateable value is less than £12,500
From 1 April 2017 the 50% award is doubled to 100% for those that meet the qualifying criteria, with the cost met by central government.
Discretionary relief may be granted to any business in the settlement, whose rateable value is less than £16,500, which the authority believes is of benefit to the local community. However in exercising this discretion the council must have regard to the interests of its council tax payers as a whole.
What are rural areas and qualifying settlements?
Rural areas are defined by legislation and for this council include all parishes with the exception of Bolton le Sands, Carnforth and Slyne with Hest.
Qualifying settlements must be within a designated rural area and have a population of no more than 3,000 on the prior 31 December. These are reviewed where necessary.
For the purposes of this relief, as all the rural parishes have a population of no more than 3,000, it is proposed that they all be treated as rural settlements with the exception of the following:
- Caton with Littledale be split between Caton and Brookhouse (including Littledale)
- Ellel be split between Dolphinholme, Galgate (to the West of the railway line and North of Salford Road) and the remainder
What are the qualifying criteria?
A general store must be a business consisting wholly or mainly of the retail sale of both food for human consumption (excluding confectionery) and general household goods, and no other such business is carried on in the settlement. Confectionery does not count as food for the purpose of deciding whether a shop is general store.
When deciding whether a business is a general store, food and general household goods are considered as a single unit and together they must form the majority of the goods on sale.
A food store must be a business consisting wholly or mainly of the sale by retail of food for human consumption (excluding confectionery and excluding the supply of food in the course of catering).
The supply of food in the course of catering includes any supply of food for consumption on the premises on which it is supplied; and any supply of hot food for consumption off those premises.
A post office must be used for the purposes within the meaning of the Post Office Act 1953, and no other property in the settlement is used as such.
A public house means premises for which a justices’ on-licence, within the meaning of the Licensing Act 1964 (other than under Part IV of that Act) is in force.
Petrol filling station means premises where petrol or other automotive fuels are sold retail to the general public for fuelling motor vehicles intended or adapted for use on roads.
What if there are two such premises in the settlement?
With the exception of food stores, unfortunately neither can qualify for mandatory relief on that basis, although if either functions as a post office then relief may be claimed on that ground.
Can other businesses apply for discretionary relief?
Yes, discretionary relief can be claimed up to the amount of the actual rate charge subject to state aid limits.
Pure discretionary relief for other businesses in a rural settlement will be considered where there is a proven need for financial assistance. In such cases the business must benefit the local community, taking into account the financial impact on Council Tax Payers.
Search rural areas and business premises
• On the map you can search for a specific address, or drag, scroll and zoom to an area.
• Tick the relevant boxes on the right hand side to view food shops, petrol stations and pubs.
• Click on points on the map to bring up further information.
The council at its discretion, can award up to 100% relief from business rates to ratepayers who are experiencing hardship subject to state aid limits. However, as the council funds a significant part of the relief itself, cases will only be considered if they are in the interest of the community. Each case will be considered on its own merits but any reduction is the exception rather than the rule. The test of 'hardship' is not confined strictly to financial hardship - all relevant factors affecting a ratepayer's ability to meet its liability are taken into account.
Also, the council must bear in mind the fact that the government has modernised empty property relief because it is committed to promoting the efficient use of land and property and provide a positive incentive to bring vacant shops, offices, workshops and warehouses back into use. These reforms are intended to encourage owners to re-let, re-develop or sell unused property, thus, improving access to premises and reducing rents for businesses, as well as reducing the need for development on greenfield land.
A £1,500 rates discount is available for office space occupied by local newspapers. This will be for a maximum of one discount per local newspaper and per hereditament from 1 April 2017 to 31 March 2025 subject to state aid limits. For further guidance on state aid see www.gov.uk/state-aid
The Government funded revaluation support scheme
It was announced in the Spring Budget 2017 that the Government will grant £300 million over 4 years 2017/18 – 2020/21 to support businesses facing the steepest increases after the Revaluation.
Lancaster City Council’s share of this fund amounts to:
- £247K in Year 1 (2017/18)
- £120K in Year 2 (2018/19)
- £49K in Year 3 (2019/20)
- £7K in Year 4 (2020/21)
The Government assumes it will be provided to:
- Ratepayers facing most significant increases in bills following the 2017 revaluation.
- Ratepayers occupying lower value properties.
Principles of the Lancaster Revaluation Support Scheme
- The rateable value for 2017/18 must be less than £200,000
- The net rates charge for 2017/18 must have increased in comparison to that for 2016/17.
- Properties that are not in the rating list prior to 1 April 2017 will not be eligible.
- Ratepayers occupying a property on or after 1 April 2017 will not be eligible.
- Unoccupied properties will not be eligible.
- Businesses benefiting from the small business relief cap of paying no more than £50 per month (£600 per year) will not be eligible.
- Businesses whose increase in the amount they are paying compared to last year is less than £50 per month (£600 per year) will not be eligible.
- Ratepayers operating an intermittent occupation/tax mitigation/avoidance scheme will not be eligible for relief.
- The scheme will target local or regional (North West) organisations. National or multi-national companies, NHS and public sector organisations will not be considered under the scheme.
- In line with the previous principle, multi property owners and/or occupiers may not be considered eligible for relief.
- Any award will be evidenced by a completed application form, including state aid compliance. Relief will not be awarded where the award would not comply with EU law on State Aid.
Where a qualifying ratepayer’s rates bill (from 2016/17 as appropriate) is adjusted for any of the following reasons, the amount of their relief due under the terms of this policy will be adjusted or removed accordingly:
- An amended rateable value in the 2010 and, or 2017 rating lists
- The provision of a certificated value for the 2010 rating list or historical change
- The application of any additional rate relief or exemption
- Vacation and re-occupation of the property
- Any other reason
The government announced in the Budget on 29 October 2018 that it would provide a Business Rates Retail Discount, to apply in the years 2019/20 and 2020/21 to all occupied retail properties with a rateable value of less than £51,000 which would total a third of the bill after Mandatory and non-locally funded discretionary reliefs were applied. The discount applied to properties that were wholly or mainly used as shops, restaurants, cafes and drinking establishments.
In response to the coronavirus pandemic, the government announced Expanded Retail Discount from 01.04.2020 which increased the original Retail discount to 100%, extended the discount to include the leisure and hospitality sectors and removed the rateable value limit.
On 3 March 2021 the government confirmed that the Expanded Retail Discount will continue to apply in 2021/22 at 100% for three months, from 1 April 2021 to 30 June 2021, and at 66% for the remaining period, from 1 July 2021 to 31 March 2022 (subject to a cap). If you are eligible to Expanded Retail Discount this will appear on your rate bill and you will receive a notice regarding this award (PDF).
The discount is awarded under section 47 of the Local Government Finance Act 1988 (as amended) and is subject to state aid limits. For further guidance on state aid see www.gov.uk/state-aid
In response to the coronavirus pandemic, the government announced that it would provide support for properties that are occupied by child care providers on Ofsted's Early Years register from 01.04.2020 to 31.03.2021. Under the scheme the amount of discount for 2020-21 is 100% and there is no rateable value limit on the relief.
On 3 March 2021, the government confirmed that it will continue to provide eligible nursery properties in England with 100% business rates relief from 1 April 2021 to 30 June 2021. This will be followed by 66% business rates relief for the period from 1 July 2021 to 31 March 2022, capped at £105,000 per business.
Last updated: 23 March 2021