Business rate changes could adversely affect small businesses

Tax experts are predicting that business rate changes on empty properties could severely affect small companies.

The changes, which came into effect at the beginning of April, effectively abolish financial relief paid to owners of empty commercial and industrial premises.

“Whereas before 1 April commercial and retail properties enjoyed full relief for the first three months and 50% relief thereafter, this has now been capped,” explains Peter Harrup, PKF partner and corporate tax specialist. “After an initial three-month rate-free period, owners will now find themselves liable for the full basic occupied rate on their empty buildings.”

The reform also affects empty industrial properties – these are now liable for full business rates after six months where previously their owners benefited from full rate relief no matter how long they remained vacant.

“Government reasoning sees the move as a way to increase business competitiveness and efficiency by incentivising landlords to re-let or redevelop their properties,” says Mr Harrup. “It also hopes to shift the focus for business development away from green-field to brown-field sites.

“While the thinking behind the changes is laudable, the result could be hardship for many small business owners who now, with the abolition of Empty Property Relief, will have to fork out hundreds, if not thousands, of pounds.

“It’s yet one more financial pressure for business, coming at a time when industry and commerce is feeling the pinch of a faltering economy.”