Call for end to empty office tax

Posted by admin on 27 October, 2008 under Business news | Be the First to Comment

A number of the UK’s leading companies are backing a campaign aimed at getting the government to scrap the tax on empty business properties.

Firms such as Tesco and British Airways have signed up to the call from the British Property Federation (BPF).

The BPF has dubbed the taxation the “bombsite Britain tax”, as it says firms are encouraged to demolish empty buildings rather than pay the tax.

The Treasury said it was keeping the matter “under review”.

‘Ludicrous’

In an open letter to Gordon Brown, the BPF said it wanted the tax suspended.

The BPF says the tax is increasing the chances that more firms, both large and small, may go bankrupt as the economy continues to contract.

“For the sake of regeneration and development, the government needs to think twice about this ill-conceived tax” Bob Laxton, MP for Derby North

“Taxing hardship and business failure is a ludicrous way to help people through the hard times,” said BPF chief executive Liz Peace.

“Brown must act now to undo this mess.”

Other firms signed up to the campaign include McDonald’s, Nokia, B&Q, Next and Legal & General.

Tax changes

The level of tax on empty premises that firms have to pay is calculated by local authorities.

Prior to changes brought in from April this year, offices and shops were exempt from taxes on empty properties for three months, and then only had to pay 50%, while industrial properties had complete exemption.

Following the reforms, offices and shops have to pay 50% of the taxes on empty buildings for the first three months, and subsequently must pay the full amount. Industrial properties have to pay 50% for the first six months, and then total amount.

“The reforms to empty property relief are aimed at ensuring a fairer balance between incentives to re-let property, and giving property owners a period of relief while they manage vacancies,” said a Treasury spokesman.

“As with all taxes we will keep the position under review.”

Council impact

Birmingham Council, which has also joined the campaign, estimates that companies in the city are having to pay more than £23m in empty rates per year.

It adds that the local authority itself has to pay more than £800,000 annually for empty council property.

The BPF is calling for full relief from the taxation for the first three months that any property is unoccupied.

It wants this to then continue indefinitely for industrial premises, and for shops and offices to only have to pay 50% of the tax after the first three months.

Other local authorities have also released figures for how much taxation they are having to pay on empty property.

Derby City Council says it has to pay £112,030 per year on 54 properties, while Bristol City Council says its bill totals £381,346.

“For the sake of regeneration and development, the government needs to think twice about this ill-conceived tax,” said Derby North MP Bob Laxton.

News reported by The BBC