Property costs are a large overhead for most businesses. Here Steve Petty lists 10 of the best ways to save money both now and when relocating.
1. Time to renew your lease?
If you are coming towards the end of your lease then now would be a very good time to take control of the renewal process. It is likely you will have been locked into a lease for a few years paying rent agreed or reviewed at the height of the market. By getting good advice and following the correct procedures you could secure a big rent reduction.
2. Restructure your lease
Many tenants do not realise that Stamp Duty can be payable when taking on a lease of business premises. The length of the lease term is an important factor in calculating how much tax is due. So rather than have a long lease with the right to end this early, stamp duty can be saved by agreeing with the landlord a shorter lease with an option to renew.
3. Claim capital allowances
Capital Allowances can be used to minimise your tax bill. Expenditure on items of plant and machinery acquired for the purpose of your trade qualify for capital allowances and the list is more extensive than most businesses appreciate. The opportunity may arise whenever capital expenditure is incurred on the purchase, construction or refurbishment of premises. The types of property where this is most effective are healthcare (doctors/dentists), leisure and hospitality (pubs/hotels) and motor dealerships/petrol stations.
Don’t forget Business Renovation Allowance either.
4. Put property into your pension
A very tax efficient way to buy commercial property can be through your self-invested pension plan (SIPP). The property can then be let to the pension holders own business or even a third party with the rent received usually tax free being just one of the benefits.
5. Strategies to avoid business rates on empty property
Owners of retail and office space must pay full business rates after they have been empty for 3 months. With industrial/warehouse units the owner is liable to pay after a vacant period of 6 months. However if a landlord lets out the property, even on a casual basis, for at least 6 weeks the respective three and six month periods start over meaning the owner can again claim empty property relief.
6. Do you have surplus space?
If yes, then it may be possible to share this on an informal licence arrangement without having to go through the lengthy and costly expense of obtaining landlord’s consent.
7. Remember – take account of VAT
If you are buying or letting a commercial property then it is likely that the seller/landlord will have elected to charge VAT on the price or rent. It is useful to ask the agent before the deal is agreed whether VAT does apply, especially if you are not going to be able to reclaim this.
Also when checking which stamp duty band the purchase price falls into make sure you use the VAT inclusive amount as this may take it into a higher rate, especially when the increase to 20% comes into force at the start of 2011.
You should contact us if you are looking to buy a property as there are legitimate ways available to minimise your stamp duty liability.
8. Appeal against your business rates
You can appeal against your business rates bill if you believe the rateable value of your property is incorrect or that your building is being affected by nearby construction work or road closures.
9. Utility costs
Just like with residential gas, electric and telephone bills it is possible to save money by shopping around for the best price. It is also worth getting an audit of your building carried out to check how energy efficient it is. Any improvements will have an affect on the energy performance certificate when coming to sell or let the property.
10. Get a schedule of condition
If you are about to take a lease and the premises are not in perfect condition then insist that a photographic schedule is attached to the lease evidencing the state of repair at the start of the lease. This will help prevent the landlord from putting in a big dilapidations claim when you leave.
To implement any of these cost saving measures or for any other property related questions contact Steve Petty, Commercial Property Solicitor 01926 629 005
This blog is not intended to constitute legal advice, nor is it intended to be a complete and authoritative statement of the law, and what we say might be out of date by the time you read it. You should always seek legal advice to confirm whether or how any information in this article applies to your particular situation. We offer a free telephone consultation to discuss your particular circumstances.