Empty shops in Aylesbury have cost the tax payer nearly £11m over the last five years

Empty shops in Aylesbury have cost the taxpayer nearly £11m over the last five years, according to government figures.

Friday, 17th January 2020, 9:50 am
Updated Friday, 17th January 2020, 12:56 pm

The lost money is a result of 'tax relief' given to landlords of empty properties.

Empty shops, offices and warehouses do not have to pay business rates for the first three months they are empty.

The aim of the tax relief is to allow for property investment and give landlords time to find a new occupant.

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Empty shops are blighting the UK's High Streets

However the costs are stacking up, with the UK Taxpayer footing nearly a £1bn bill per year as our High Streets lie in tatters.

Last year, Aylesbury Vale District Council have given out £2,783,159 in tax relief exemptions to landlords of empty units.

This is the most in the last five years, as the High Street continues its long slow decline.

Predicted figures show that this year will not show signs of improvement, and the tax relief exemption figure is anticipated to be near the £1.4m mark.

Thie graph shows the tax relief given to landlords and accounts for lost revenue for Aylesbury Vale District Council

Over the past five years, empty business units in Aylesbury Vale are costing taxpayers an average of £2.3m in lost rates.

So what is empty premises relief?

Under law, empty business premises cannot be taxed under the business rates system for at least three months. After this time, most property owners must pay full business rates.

One consequence is that when shops and factories close suddenly, it can result in sizable shortfalls in council funds. In 2015, the collapse of Teesside Steel cost £10.4m in empty premises relief to Redcar and Cleveland council.

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Some businesses can get extended empty property relief. Industrial premises, for example, are exempt for a further three months and listed buildings are exempt indefinitely.

Not all the potential income lost through empty rates relief would be retained by the local authority. Under current legislation, around half of business rates collected is retained by the LA and the rest is returned to the government for redistribution.

Business rates have always been a controversial issue. They are blamed regularly for the precarious situations of many of Aylesbury's wonderful independent shops.

Local retailers have long lobbied for the burden of business rates to be reduced - however councils are becoming increasingly dependent on business rates as income grants from central government are scaled back and in Buckinghamshire County Council's case, completely removed.

This graph shows the potential income for Aylesbury Vale if empty units were filled with business tenants

Dominic Curran, Property Advisor at the British Retail Consortium, said: “It has been a challenging year for many retailers, as many shops struggle to adapt to rising cost pressures and changing consumer habits.

“High among the concerns for retail firms is business rates – a tax which disproportionately harms retailers, driving shop closures and job losses, leaving empty shopfronts and harming local communities.

“It is essential that the Government makes good on its pledge to reform this broken tax system.”

Government reports have acknowledged uncertainty over the future of business rates reforms had affected councils’ financial planning, however there has been no sign of concrete action to reinvigorate our high streets.

A Treasury spokesperson 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.

This graph shows the percentage of business rates income lost when units are kept empty

“We will announce further details of the business rates review in due course.”

Howard Mordue from Aylesbury Vale District Council said: ""Firstly, Business Rates are a national scheme for which the Government sets the rules: not local councils. We are a local collection authority, effectively on the Government’s behalf.

"We don’t give Tax Relief, it’s a Statutory Exemption. Aylesbury Vale District Council isn't giving money back to businesses, it just isn't collecting where an exception applies. So the suggestion that we have 'given out' money isn't an accurate statement.

"The Government has given numerous additional reliefs to High Streets and small businesses in recent years to try and help the local economy. These make a valuable contribution to the work we undertake as a local authority, supporting economic development across the Vale.

"More information on the full range of business rate reliefs can be found here: https://www.gov.uk/apply-for-business-rate-relief."

This graphs shows the actual income taken from business rates