FSB: Landlords with empty properties in for a shock

The Federation of Small Businesses (FSB) is concerned that small firms that have empty properties could have to pay thousands extra in business rates with changes to the exemption from paying empty property rates due to come into force from April this year.

The exemption, introduced in 2009, meant that businesses with an empty property in England with a rateable value below £18,000 did not have to pay business rates. The Government plans to cut this threshold from £18,000 to just £2,600, placing a very significant burden on many small firms that are struggling in the current economic climate.

Just as alarming is the fact that the Government will not re-introduce a 50 per cent relief and that small firms will not be able to claim Small Business Rate Relief on the property.

This means that struggling business owners who have had to vacate a property and cannot rent or sell it will have to pay more in rates than if they were running a company from the property.

The FSB has written to local government minister, Bob Neill MP, to express its concerns that this move could put some small firms out of business. If the threshold is going to be cut then the FSB calls for a return to the pre-April 2008 situation of granting 50 per cent relief or at the very least, allow a business to claim Small Business Rate Relief on their empty property.

Roger Culcheth, Local Government Policy Chairman, Federation of Small Businesses, said:

“The Government has said that small businesses have a vital role in driving economic growth and getting the recovery on a firm footing, yet for some businesses this additional tax could tip the balance and force them into insolvency.

“The result of this cut in the threshold without restoring the 50 per cent relief will make small business owners worse off than they were prior the 2009 change and significantly more so then they were in 2009 and 2010. We urge the Government to look closely at this matter and, at the very least, allow the business to claim Small Business Rate Relief.”

ENDS

Notes to Editors

The FSB is the UK’s leading business organisation with over 210,000 members. It exists to protect and promote the interests of the self-employed, and all those who run their own business. More information is available at www.fsb.org.uk

More information can be found on the Communities and Local Government website.

Example 1

A small business who owns an empty property with a rateable value of £17,000
Currently he will pay nothing because the rateable value of the property falls below the £18,000 threshold. From April 2011 onwards he will be liable for 100% of the business rates on that property. (approx £7,300 a year – based on next year’s 43.3p business rate multiplier)

Example 2

A small business owner with a single empty property with a rateable value of £5,500
Currently he will pay nothing because the rateable value of the property falls below the £18,000 threshold. From April 2011 onwards he will be liable for 100% of the business rates on that property. (around £1,270)

However if that property were not empty and the small business owner was using the property he would only have to pay 50% of that figure because he would be eligible for Small Business Rate Relief (SBRR). SBRR is not available on empty properties. This means that a small business owner whose business is struggling will have to pay more while his property is empty that if he was using it.

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Contacts

Andrew Cave, Chief Spokesperson: 07917 628991
Prue Watson: 020 7592 8121/ 07825 125695 prue.watson@fsb.org.uk
Sara Lee: 020 7592 8113/ 07595 067068 sara.lee@fsb.org.uk

For regional FSB contacts please go to www.fsb.org.uk