Up to £1.1 billion in business rates were paid on empty properties last year – a 19 per cent increase since 2009 – the Tax Payers’ Alliance (TPA) has revealed.
The figure has been calculated for the first time since exemptions for empty commercial and industrial properties were abolished in the 2007 Budget.
The TPA said the tax on empty properties was ‘ruining’ property owners, particularly in light of the economic downturn which has made it increasingly difficult to find new tenants quickly.
As a result, some landlords are resorting to demolishing properties instead of paying the full rates. Pensioners who bought commercial units as a means of supplementing their retirement income are also being hit.
Current business rate reliefs for empty premises include a three-month exemption period for non-industrial property, or a six month-exemption period for industrial property, with full rates applicable thereafter.
Prior to the 2007 Budget, industrial properties were exempt from all business rates while landlords with empty properties were exempt from rates for the first three months and received a 50 per cent relief thereafter.
Chief executive of the TPA, Matthew Sinclair, said: “It is extremely unfair that property owners are being hit with enormous business rates on properties which are empty, with no rent coming in that they can use to pay the bill.”
“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 alliance is now calling for Government to address the issue in Parliament.