Business rates – extension to Empty Property Relief reset period

The reset period required for property owners to benefit from Empty Property Relief has been extended to three months from 1 April 2024.

The Government has released their summary of responses following the consultation into Business Rates Avoidance and Evasion conducted in July 2023. The most notable outcome of this consultation is the extension of the Empty Property Relief (“EPR”) reset period from six weeks to three months.

The Government hasn't dragged their heels, and this change is due to take effect from 1 April 2024.

What is EPR?

EPR allows owners of empty non-domestic properties to benefit from 100% relief from business rates for the first three months (or six months for industrial properties) after the property becomes empty. Once this period ends, the owner becomes liable to pay the property’s business rates.

What is the reset period?

The reset period is the minimum period of occupation required for another period of EPR to apply.  Currently, a property needs to be occupied for six weeks to benefit from a further relief under the EPR. 

However, from 1 April 2024, this reset period will be increased to three months. Although the new regulations aren't 100% clear, it looks like any period of occupation begun before 1 April 2024 will still qualify under the old rules (ie 6 weeks not 3 months). 

Why has the reset period been extended?

Some respondents to the consultation were concerned about the extent of business rate avoidance through exploitation of EPR. Over half of respondents believed that by introducing a longer reset period, the losses from business rates avoidance and the financial incentive to avoid business rates would be reduced.

Changes to EPR have been long-awaited. The introduction of an extension to the reset period would appear to be a sensible, easy to navigate solution to this issue, rather than the implementation of more nebulous proposals, such as tightening the definition of ‘occupation’ or affording discretionary powers to the billing authorities.

What else did the consultation conclude?

The consultation considered the notion of abolishing the ‘next in use’ exemption for claiming EPR, which applies to empty properties likely to be used by charities or registered community amateur sports clubs in the future. No general consensus was reached in the responses in how to tackle this type of avoidance and the Government’s formal response to this approach is under review.

The response report further announced an initial consultation into the merits of a “General Anti-Avoidance Rule” to assist local authorities in tackling business rates avoidance. Further information on this is expected in due course and would likely have far reaching consequences if it was enacted.

Our real estate disputes practitioners are leading experts on business rates law. If you need any assistance in relation to EPR or business rates advice, please contact the authors.

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