Non-Domestic Rates - Empty Property Rates Relief

About this guidance 

This guidance provides ratepayers and local authorities with information about non-domestic rates (NDR) empty property rates relief. It applies to Wales only and does not replace any existing NDR legislation or any guidance on other reliefs.

Billing queries about the reliefs should be directed to the relevant local authority. Contact details for local authorities can be found here. Enquiries about this guidance and the related legislation should be sent to the Welsh Government at the following email address: LocalTaxationPolicy@gov.wales

A range of other mandatory and discretionary NDR reliefs are also available to specific types of property or occupiers. Further information about NDR relief schemes can be found on our Business Wales webpages.

Introduction

Section 45 of the Local Government Finance Act 1988 (the 1988 Act) sets the liability of unoccupied property in a local rating list at 100% of the occupied rates. In certain circumstances this liability may be reduced.

This guidance provides information on:

• Initial period of relief for empty properties;
• Properties which do not pay empty property rates;
• Empty property relief for charities and community amateur sports clubs (CASCs); 
• Partly-occupied properties; and
• Tax avoidance and empty properties.

Section 44A of the 1988 Act provides local authorities with discretion to make a reduction to a ratepayer’s liability where it appears to the local authority that part of a property is unoccupied and will remain so for a “short time only”.

Initial period of relief for empty properties

The Non-Domestic Rating (Unoccupied Property) (Wales) Regulations 2008 (the 2008 Regulations) provide for mandatory relief to be granted in the first three months, or six months if classified as industrial, that a non-domestic property is empty.  

It further provides that, to qualify for this initial period of relief, the empty property must have been occupied for a period of more than 26 weeks immediately beforehand. Any period of occupation which is less than 26 weeks is disregarded. This avoids the claiming of consecutive periods of relief after short terms of occupancy.

Properties which do not pay empty property rates

The 2008 Regulations also define the types of property which do not pay empty property rates (even after the three-month rate-free period).  

These include:

• Properties where occupation is prohibited by law;
• Properties kept vacant by reason of certain action taken by the Crown or a local or public authority;
• Listed buildings and those subject to preservation notices;
• Scheduled monuments; 
• Properties whose owner is entitled to possession only as a personal representative of a deceased person, liquidator or trustee under a deed of arrangement;  
• Property whose owner is the subject of insolvency proceedings; and
• Property whose rateable value is less than £2,600.  

Empty property relief and charities and CASCs

The 1988 Act provides full charitable relief for unoccupied properties where the ratepayer is a charity or CASC and all eligibility criteria are met.

Relief will be provided where the ratepayer is a charity or trustees for a charity and each of the following applies: 

• the local authority is satisfied that a property is unoccupied for a reason related to the charitable purposes of the charity;
• the local authority is satisfied that, when next in use, the property will be wholly or mainly used for the charitable purposes of the charity (or of that and other charities);
• the trustees for the charity have provided the local authority with a copy of the charity’s most recent accounts; and
• where an annual report is required to be prepared by the charity, the trustees for the charity have provided the local authority with a copy of the charity’s most recent report.

Relief will be provided where the ratepayer is a CASC (a registered club for the purposes of section 658 of the Corporation Tax Act 2010) and the local authority is satisfied that, when next in use, the property will be wholly or mainly used for the purposes of that club (or of that and other CASCs).

Evidence required to claim empty property relief for charities

The Local Government Finance (Wales) Act 2024 inserted paragraph 2(3) to (8) of Schedule 4ZB to the 1988 Act, to strengthen the eligibility criteria for empty property relief for charities and address exploitation of this relief for the purpose of non-domestic rates avoidance. From 1 April 2025, the local authority will consider evidence provided by the ratepayer to determine whether they are eligible for relief.

The relevant local authority will determine how to satisfy itself with respect to the reason a property is unoccupied and intended future use. It is recommended that a written explanation and declaration is required from the ratepayer, particularly if they have not previously occupied the property. The ratepayer should be able to explain why the property is unoccupied and how (and when) it is intended to be occupied in future, related to their charitable purposes. The local authority may request any further evidence that is considered appropriate in support of the explanation provided.

This approach will enable the local authority to consider whether the explanation given is compatible with the property. If the local authority is not satisfied by the explanation given, it will withhold relief on that basis. It is anticipated that ratepayers will need to periodically provide updated evidence to satisfy the local authority of their continued eligibility, particularly if the empty period lasts longer than anticipated.

Different types of charities are subject to different accounting and reporting requirements under charity law. A charity should be able to confirm to the local authority what type it is and the associated requirements.

A charity’s most recent accounts are:

• in the case of a charitable company, the annual accounts prepared under Part 16 of the Companies Act 2006 which have either been audited, examined by an independent auditor, or relate to a year for which the company is exempt from audit (and neither section 144(2) nor section 145(1) of the Charities Act 2011 (the 2011 Act) applies);
• in the case of an exempt charity, the accounts prepared and (if necessary) audited; or
• in the case of all other charities, the statement of accounts prepared under section 132(1) of the 2011 Act, or the account and statement prepared under section 133 of the 2011 Act.  

A charity’s most recent annual report (where required) is that prepared in accordance with sections 162(1) and 168(3) of the 2011 Act. An annual report is not required from a charity that is not required to be registered with the Charity Commission. A charity is not required to be registered if:

• it is an exempt charity (section 30(2) of the 2011 Act); 
• it is excepted by the Charity Commission or by regulations, complies with conditions of the exception, and its gross annual income does not exceed £100,000 (section 30(2)(b) and (c) of the 2011 Act) (excepted charity)); or
• it is not an exempt or excepted charity, and its gross annual income does not exceed £5,000 (section 30(2)(d) of the 2011 Act; such charities are commonly referred to as “small unregistered charities”).  

The Charity Commission may, however, choose to request an annual report from an excepted charity, in accordance with section 168(2) to (8) of the 2011 Act (although this is only likely to occur in exceptional circumstances). Where such a report has been requested by the Charity Commission, the excepted charity will be required to provide a copy of its most recent report to the local authority.

Providing evidence of compliance with these established legal requirements will demonstrate that the ratepayer is a functioning charity. This evidence should already exist and sharing it with local authorities will not, therefore, impose any undue burden on genuine charities seeking to claim relief.

A ratepayer will benefit from relief once a local authority confirms it is satisfied that they have met the eligibility criteria. For newly created charities which have yet to prepare annual accounts (and annual reports where relevant), this may mean there is a lag between becoming the ratepayer and the awarding of relief for an empty property. When the charity can evidence their eligibility, the local authority will be able to make adjustments to their bill to account for any overpayment, backdated to the relevant chargeable date. If a local authority reasonably believes that a new charity is genuine and will be able to evidence their eligibility in due course (e.g. once they have produced their first accounts and annual report), they may alternatively choose to award discretionary relief as an interim measure. 

Partly-occupied properties

Local authorities may choose to adjust the liability for partly-occupied properties when there are practical difficulties in occupying or vacating a property. For instance, when the occupation or vacation of the property needs to be phased over a number of weeks or months, or when some event such as fire or flood has rendered part of the property unusable.

This approach is not intended to be used where part of a property is temporarily not used or its use is temporarily reduced (e.g. where plant, equipment or machinery remain in it).

Applicants should provide the date the property became or will become partially occupied, the reason for partial occupation and the date that they expect the property to be fully occupied or fully vacated.

Where a local authority proposes to provide a reduction, it should seek an apportionment of the rateable value from the valuation officer. On receipt of such a request, the valuation officer is required to apportion the rateable value of the property between the occupied and unoccupied parts of the property. This enables empty property relief to be calculated and applied in respect of the unoccupied part of the property only.

After the initial period of relief which would be applicable to the unoccupied part of the property expires (after three months, or six months for industrial properties), in most cases the apportionment will end and the occupied rate will apply to the whole property. However, if the occupier would not be liable for the empty rates on the property because it is exempt or if the property would receive another relief (e.g. owned by a charity or trustees of a charity or owned by a registered CASC), the apportionment will continue to have effect and the ratepayer will not be liable for rates on the empty part.

The operative period starts on the day on which the property became partly unoccupied. In the case of a further apportionment, the operative period starts on the day on which the further apportionment takes effect. In both cases, the period continues until one or more of the following events occur:

• the occupation of any of the unoccupied part of the property to which the apportionment relates;
• the end of the financial year in which the local authority requires the apportionment;
• the requiring of a further apportionment;
• the property becoming completely unoccupied.

The constraints above mean that, after 31 March each year, any apportionment that is operative ceases to have effect. If a local authority wishes to continue the arrangement in the following financial year, it must use its discretion to require a further apportionment. In practice, if there has not been any change to the extent that the property is partly occupied, the earlier certificate provided by the valuation officer could stand unless:

• the next financial year is a revaluation year; or 
• the rateable value for the hereditament has otherwise been altered (e.g. on a material change in circumstances).

Where the part of the property which is vacant is capable of separate assessment, it will not be necessary for the local authority to exercise its discretion if the valuation officer is asked to split the existing assessment into the part that is occupied and the part that is vacant.  

Tax avoidance and empty properties

The most common methods of rates avoidance appear to be associated with empty property relief. Common avoidance tactics include: 

• repeated periods of artificial/contrived occupation;
• artificial or contrived occupation of properties by charities; and
• the use of insolvency exemptions.

Local authorities will already be aware of these above tactics and a number of others. It is important that they examine each application carefully and ask for further information and evidence when there is doubt as to whether any relief should be given.