Property Law: Business rates threshold to drop

The Department for Communities and Local Government recently announced that the empty property relief threshold for business rates will be reduced to its 2010 level from April 1, 2011.

This means that those publicans who are the leaseholders or freeholders of pubs that have been forced to close, but who have not managed to sell their interest, may soon be faced with the requirement to pay the business rates for the property, even though it's empty.

It is also a further point to remember if you are considering the possibility of closing your pub and you are calculating what your future liabilities will be.

If a pub is empty, the owner is afforded three months' grace from the date the pub becomes empty where no business rates are payable. Unless the pub qualified for empty property relief you would have to pay the business rates after this date.

In April 2010 and in light of the number of empty commercial premises, the government announced that the threshold for properties to qualify for empty property relief from business rates was to be increased.

Before April 2010 if the rateable value of the property was below £2,600 you qualified for empty property relief and no business rates were payable.

After April 2010 this threshold was temporarily increased for any non domestic property with a rateable value of less than £18,000.

There was hope rather than expectation that the government would extend the period for the increased threshold, but this has not materialised and this could further squeeze the industry.