Taxpayers in ‘tug of war’ over business rates relief

Empty commercial units are costing taxpayers more than £1 billion a year, according to a major new study.
The research, published by the BBC Local News Partnerships, looks at the impact of empty premises relief on local authority funds.
Under the scheme, business rates cannot be collected on empty business properties for at least three months. It is designed to give landlords time to find new occupants or give property investors time to repurpose a commercial unit.
However, with record numbers of shops and businesses failing, the empty premises relief is leaving a “sizeable” hole in council funds.
According to a separate study, around 16 stores are closing every day as high rents and business rates cripple the high street. It means that more than 2,860 shops have closed over the last six months alone – each attracting three months of tax-free rates.
However, business bodies say the relief should be not be scrapped as disproportionate business rates and booming employment costs are to blame for the collapse of the traditional high street model.
Mike Cherry, National Chairman at the Federation of Small Businesses (FSB), said: “As business rates hikes contribute to closures on our high streets in increasing numbers, it would add insult to injury to then remove a relief for empty units. Fundamentally, without the current business rates system, we’d have far fewer empty shops on our high streets – and less of a need for empty premises relief.
“Instead, we should be scaling back a tax that has materially damaged firms all over the country, and recalibrating business rates to encourage a mixture of thriving small businesses on diverse high streets, which are at the heart of communities.”
Commenting on the report, A HM Treasury spokesperson said: “Empty property relief strikes a balance between incentivising property owners to put vacant properties to use, while not penalising those who lose a tenant at short notice.
“Whilst the rate of business rates collection varies between individual authorities, the local government finance system has been designed so that business rates income is redistributed across the country according to the needs of local areas.  
“We will announce further details of the business rates review in due course.”
The study follows the announcement that the Government will continue to cut business rates by a third for the smallest businesses. The ‘Retail Discount’ is available for occupied retail properties with a rateable value of less than £51,000 in each of the years 2019/20 and 2021/21.

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