If you are a commercial property owner or hold property as an investment, possibly in a self-invested personal pension, be aware of the tax on empty retail, office and industrial space, says Nathaniel Litmann in The Schmidt Report.
In the 2007 budget the government announced it would scrap empty property rate relief, introduced in the 1980s, as of 1 April this year. Commercial property, which had been subject to 50% rate relief, was given three months’ leeway, while industrial property, which had been subject to 100% relief, had six months. Those six months are about to end.
The rule change was aimed at landlords who left buildings empty as they waited for rents to rise. It was supposed to cut rents, raise property supply and earn almost £1bn in tax. But in the current downturn, landlords unable to find tenants are finding it is cheaper to demolish properties than to pay tax on them. A factory owner in Swindon has spent £430,000 demolishing his premises rather than pay the £110,000 annual tax bill, says the FT. Yet another reason to steer clear of property.