Given the ongoing impact of COVID-19, the Budget was keenly anticipated in the hope that the Government would confirm continued financial support for individuals and businesses adversely impacted. Many feared that various tax rises would also be announced to begin the process of paying back recent Government borrowing.
Within this edition, we look at the specific announcements concerning business rates and examine how the changes might be implemented.
Extension of Rates Relief
The current Expanded Retail Discount offering 100% rates relief was due to end on 31 March. The Chancellor confirmed this 100% Discount will now continue for eligible retail, hospitality and leisure properties from 1 April to 30 June.
A lower 66% relief will apply from 1 July to 31 March 2022 for properties that were required to be closed on 5 January 2021. However, this lower relief will be subject to a £2 million cap per business. Amongst eligible properties, there have been those like essential retail that have been allowed to open during the current lockdown, and in those cases the cap for the lower relief will be limited to just £105,000 per business.
The lower additional rate relief from July, will assist many ratepayers who will hopefully be trading by 1 July even though the caps appear modest, especially for larger ratepayers.
The Government has instructed billing authorities to provide ratepayers an opt out mechanism for those businesses not wanting the Expanded Retail Discount from 1 April 2021.
What about Non-Retail, Hospitality and Leisure?
There continues to be little or no Government financial support for ratepayers outside of retail, hospitality or leisure sectors faced with unaffordable business rates bills.
The only recourse for the majority of ratepayers not eligible for relief, is to pursue a rateable value reduction via a material change of circumstance appeal. If successful, ratepayers will be entitled to backdated refunds.
However, resolving rating appeals takes a significant amount of time, just when many ratepayers urgently need financial support.
Businesses Paying Back Rates Relief
Several businesses including essential food retailers have paid back relief. Many of the same businesses have also announced that they do not want any rates relief from 1 April.
The Chancellor confirmed the Government will legislate so any rates relief repayments will be deductible for corporation tax purposes. Consequently, from a corporation tax perspective, those businesses will be viewed as having paid their business rates.
New-Year Rate Demands
The Government previously requested that billing authorities delay issuing their 2021/22 rate demands until after the budget.
We understand that councils will start issuing rate demands for properties outside retail, hospitality and leisure sectors quickly and expect new-year instalment payments to commence in April.
However for those properties eligible for relief, we expect that ratepayers will have to apply for relief from 1 July and declare that they have not reached the £2 million or £105,000 cap.
The Chancellor announced Restart Grants to assist businesses reopening their premises.
The grants will be up to £6,000 per property for non-essential retail and up to £18,000 per property for hospitality, accommodation, leisure, personal care and gym businesses.
What about Scotland, Wales and Northern Ireland?
The Budget only applies to England since business rates is a devolved power.
Prior to the Budget, the Scottish Government announced a 3-month extension of rates relief for much of the retail, hospitality and leisure sectors from 1 April to 30 June. They later extended this relief further to 12 months. However the 12-month extension required extra funding and could only be given if the Chancellor announced a similar extension in England (additional funds would then be allocated to the devolved Government via the Bartlett Formula).
It will be interesting to see if the English relief extension provides enough additional funding for Scotland to fund their full 12 months relief. If not will the Scottish Government have to follow England with a limited relief from July.
The Welsh Government received sufficient extra funding and extended rates relief for the whole of 2021/22 for the retail, hospitality and leisure sectors. The only exception being retail properties whose rateable value is £500,000 or higher.
For more information on the services we provide and how we can help mitigate your business rates liability, please get in touch with a member of our business rates team.