COVID business rates relief explained
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At the beginning of March, Chancellor Rishi Sunak delivered his Budget for the year. At the time, he announced an extension to the 100% business rates relief for eligible retail, leisure and hospitality properties in England. However, on 25th March, the Treasury also announced £1.5 billion for a COVID business rates relief fund targeted at affected firms in other sectors. We’ve written this post to clarify how the different forms of business rates relief work – and explain how you can apply.
Recap: relief for the retail, hospitality and leisure sectors
The Budget extended the 100% business rates relief for eligible properties in these sectors until 30th June 2021. From 1st July 2021 until 31 March 2022, rates will be discounted by two-thirds. From April 2022, business rates for these sectors will revert to normal.
Eligible properties for this relief are:
- Restaurants, cafés, bars and pubs
- Cinemas and live music venues
- ‘Assembly’ or leisure properties such as sports clubs and gyms
- Hospitality property, including hotels, guest houses and self-catering accommodation.
If you are eligible for this relief, your council should apply the discount automatically. If you think your council has made a mistake, get directly in touch with them.
COVID business rates relief fund for other sectors
The government recognises that the pandemic has hit many business rates payers in other sectors. For example, many wholesalers have seen their turnover plummet as a direct result of COVID-19.
Over the last year, a significant number of affected firms have appealed their business rates bills, arguing a ‘material change of circumstance’ (MCC). However, government has now made clear that it will legislate to rule out COVID-19 related appeals. It will do this because it believes such appeals could also benefit firms that have not suffered an economic impact. It gives the example of a company that now has 50% of staff working from home but has not suffered economically. The government wants to stop such firms claiming an MCC on the basis of reduced occupancy (i.e. because of social distancing guidelines) and thus benefiting from a significant reduction in business rates.
Instead, the government’s new £1.5 billion scheme is aimed at businesses that are genuinely struggling because of the pandemic. This will be ‘distributed according to which sectors have suffered most economically, rather than on the basis of falls in property values’.
How do I claim from the new business rates fund?
The money for the new fund will be distributed to local authorities. How much they get will depend on their stock of properties occupied by businesses in affected sectors. The plan is for councils to use their knowledge of the local economy and businesses to make awards. That said, the Treasury clarifies that:
“The £1.5 billion pot will be distributed according to official data on the impacts of the pandemic on different sectors, ensuring an even and more proportionate allocation of support across England based on the economic impacts of COVID-19 and not on estimates of the impact on a property’s value.”
Applications for the new fund aren’t open yet. The government wants its MCC legislation to pass first and give local authorities time to set up their relief schemes. However, as soon as we know that the scheme is open, we’ll post an update on your blog.
One thing worth noting is that, while government plans to put a stop to MCC appeals because of COVID-19, there are still many valid reasons for firms to argue a material change of circumstance – which could reduce their business rates bill. If you think you may be affected, talk to your THP account manager.
About Jon Pryse-Jones
Since joining THP in 1978, Jon Pryse-Jones has been hands on with every area of the business. Now specialising in strategy, business planning, and marketing, Jon remains at the forefront of the growth and development at THP.
An ideas man, Jon enjoys getting the most out of all situations, “I act as a catalyst for creative people and encourage them to think outside the box,” he says, “and I’m not afraid of being confrontational. It often leads to a better result for THP and its clients.”
Jon’s appreciation for THP extends to his fellow team members and the board. “They really know how to run a successful business,” he says. He’s keen on IT and systems development as critical to success, and he continues to guide THP to be at the cutting edge and effective.