UK to reduce tax relief on vacant assets

The British Government published new legislation last Friday aimed at bringing vacant properties back into use and encouraging regeneration of town centres. The new bill, expected to raise some £900 mln, will reduce the tax relief for vacant business buildings as well as introduce allowance to support the renovation of empty premises.

At the moment, owners of disused shops or offices pay no tax for the first three months the building is left standing empty and 50% in following months whilst warehouses and factories constitute an exception as they receive 100% relief at all times. From next April, owners will have to pay business rates after six months for factories and warehouses and after three months for any other property.

Local government minister Phil Woolas said that it is 'daft for the state to subsidise empty properties when commercial rents are so high.' He also said that a new 100% capital allowance will be introduced to fund the cost of renovating or converting unused business in deprived areas.

The government intends to consult over the summer on the detailed aspects of the reforms. The legislation, which requires approval by parliament, is expected to come into force by April 2008.