Forming Companies to Avoid Rates

[EmbraFella]

The non-domestic rates system in Scotland was rudely and hurriedly altered this year leaving me with bills I really wasn't expecting nor budgeted for.

I have a listed building that is split into units to rent out the various sections as offices. Sadly the pandemic meant the loss of several tenants and it now has empty units. Under the previous rates scheme, they were all fully discounted for rates. As a very passive landlord, this was ideal for me. The short term plan was to make a long term plan to decide whether to retenant, reinvest or sell on.

Whatever that plan will be, is at least 18 months away and the bills are far greater than the current modest profit.

I understand full rates relief is available if 1) the rateable values of individual premises are £20k or less and 2) the property is actively occupied. There's tapered relief between £12k and £20k and under £12k, full relief.

I now have an embrionic plan forming in my mind to create three limited companies that will lease units ensuring none of them take units over the £12k limit. Is this something that is realistic?

 

[Red Wood]

We have done this before. Took a second smaller warehouse for 3 years under a different ltd company. It was a value add activity for the main business, but saved us the rates.

Friend of mine is actively doing it currently with two units.

Quite common from my experience.

 

[EmbraFella]

I'm guessing Companies House don't care so long as the paperwork is done.

At least you could demonstrate "actively occupied". I've no idea how low that bar can be set to still be fore-filled.

 

[Picture Bute]

The non-domestic rates system in Scotland was rudely and hurriedly altered this year leaving me with bills I really wasn't expecting nor budgeted for.

I have a listed building that is split into units to rent out the various sections as offices. Sadly the pandemic meant the loss of several tenants and it now has empty units. Under the previous rates scheme, they were all fully discounted for rates. As a very passive landlord, this was ideal for me. The short term plan was to make a long term plan to decide whether to retenant, reinvest or sell on.

Whatever that plan will be, is at least 18 months away and the bills are far greater than the current modest profit.

I understand full rates relief is available if 1) the rateable values of individual premises are £20k or less and 2) the property is actively occupied. There's tapered relief between £12k and £20k and under £12k, full relief.

I now have an embrionic plan forming in my mind to create three limited companies that will lease units ensuring none of them take units over the £12k limit. Is this something that is realistic?

I'm not sure if SBBS varies between council areas (I don't think it does as it was a Scottish Govt initiative). Where I am (Argyll & Bute) the 100% relief is up to 18K in NDR value, which can be multiple properties. I had 2 at one point totalling 17K and got the full 100% off both.

A lot depends on your council area when you fill in the SBBS application for each property. Certainly in my area, people have been refused or lost relief as the buildings were clearly not actively occupied.

 

[WaveJumper]

Details here ?

Small Business Bonus Scheme

Find out about the non-domestic rates reliefs (discounts) available in Scotland, including the Small Business Bonus Scheme, and how to apply.

www.mygov.scot