The government’s policy of offering business rates relief to owners of empty commercial properties is depriving taxpayers of around £1 billion a year.
That’s according to the BBC’s Shared Data Unit, whose analysis shows that local councils are losing out on millions of pounds in many cases because landlords who own business premises get given rates relief after their properties are vacated.
With so many shops being closed down on high streets across the country in recent years, local authorities are being left out of pocket on a sizeable scale as a result of the rates relief system.
Many different business bodies have been calling on the government to overhaul its business rates system of late, typically because they feel it makes life unfairly difficult for retailers and other high street operators.
For example, the British Retail Consortium (BRC) has been calling for a business rates rethink for years, insisting that the current system harshly impacts its members.
The BRC’s chief executive Helen Dickinson recently said that she considers it essential for the government to review and reform its “broken business rates system”.
But while high street operators are often struggling to deal with the financial pressures involved in paying their business rates, local authorities are also seeing their incomes diminished if enterprises in their area are forced to close.
Reflecting on some of these issues, Richard Watts from the Local Government Association said in a statement: “Business rates are an extremely important source of income for local government and with an overall funding gap of £8 billion by 2025, the government must commit to moving forward with vital reforms.”
Those reforms should, he said, “include addressing business rates avoidance and the impact of reliefs, such as empty premises relief”.
A spokesperson for the Treasury 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.”