Tax boost on empty properties

CHANCELLOR Alistair Darling today gave a boost to the commercial property sector after changing the tax on empty business properties.

However the move has only been made for properties with a rateable value of below £15,000 which Mr Darling said made up 70% of vacant buildings in the UK.

Mr Darling announced in today’s pre-Budget report that businesses will have the relief from property rates from 2009/10.

The controversial legislation has been slammed by property owners since its introduction earlier this year, with reports of firms knocking buildings down to avoid the charge being made.

Some of the biggest names in the sector have criticised the Government after it scrapped the relief enjoyed by retailers, offices and manufacturers on empty property taxes in April, meaning businesses have to pay tax on a building if it is vacated for more than three months.

The tax has been labelled the “Bombsite Britain” tax by critics because many businesses have chosen to demolish empty buildings instead of paying it.

On April 1, the legislation was introduced which saw industrial property owners obtain 100% relief for only the first six months that a building is vacant. All other empty commercial properties have three months’ rates relief and then incur the full amount following the new legislation.

Prior to April 1 present owners of industrial property obtained 100% rate relief when buildings are unoccupied. Owners of other commercial property, shops and offices, obtained 100% relief for the first three months and 50% relief after that.

Global groups including British Airways, Tesco, McDonald’s and Nokia have thrown their weight behind the campaign to scrap empty property rates, joining developers and small property firms across the UK to get business rate relief on empty buildings to be reapplied immediately.

The aim of the abolition of tax relief for empty properties was intended to prevent landlords from keeping them vacant while housing was in high demand.