Business rates on empty buildings ‘unfair’, says Taxpayers’ Alliance

9 Apr 13
Charging business rates on empty properties is holding back economic growth, the Taxpayers’ Alliance warned today.

By Richard Johnstone | 9 April 2013

Charging business rates on empty properties is holding back economic growth, the Taxpayers’ Alliance warned today.

An analysis by the group found revenue from rates on empty commercial buildings in Britain had increased by 19% since 2009/10, after a number of exemptions were ended. In 2011/12, £1.1bn was raised, according to the alliance’s Research Note.

Until the 2007 Budget, landlords with empty commercial properties were exempt from business rates for the first three months and charged at 50% thereafter. This changed to a six-month exemption for industrial property and three months for non-industrial buildings, followed by full rates.

Some relief was offered for properties with a rateable value below £18,000 in subsequent years, meaning 2011/12 was the first year the full tax had to be paid.

Matthew Sinclair, chief executive of the Taxpayers' Alliance, said the charge was ‘extremely unfair’ as the economic downturn was making it increasingly difficult for landlords to find new tenants. This had led to unnecessary demolitions and was also stopping redevelopment of properties that could boost growth.

Some pensioners, who had bought commercial units as a means of supplementing their retirement income, were facing ‘economic ruin’ after being hit by payment demands, Sinclair added.

In opposition, both the Conservatives and Liberal Democrats had criticised the last Labour government’s plan to charge full rates.‘As the true scale of this ugly tax becomes apparent, ministers cannot keep ignoring their own rhetoric in opposition and leave it in place,’ Sinclair said.

‘There are elderly people who invested in a small commercial or industrial unit in the reasonable expectation that the rent would top up their pension. This new tax is ruining them. The rest of us lose out as the mere threat of having to pay rates on empty properties is discouraging people from putting money into new developments or refurbishing existing properties, which is undermining the prospects for economic growth.’

The research was compiled using Freedom of Information requests submitted by the alliance. Requests were submitted to all local authorities in England, Wales and Scotland responsible for the collection of non-domestic rates.

The most raised in taxation on empty properties was in the City of Westminster, where £100.7m was paid. This was more than five times both the highest outside London – Birmingham with nearly £20.2m – and the next highest in the capital, Tower Hamlets with £18.3m.


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