Following the Chancellor’s announcement of a 100% rates discount for retail, leisure and hospitality properties, further guidance on how this relief is to be administered has been issued to local authorities in England.
The full guidance can be found here, but we outline the main areas of interest below. We also take a look at the measures that have been announced in the devolved administrations.
On a separate note the Bill to confirm the next revaluation date in England of 1st April 2021 was given its first reading in the House of Lords yesterday which is a positive step. However bearing in mind the current unprecedented circumstances the expectation of rates bills in 2021 based on economic circumstances in April 2019 will raise its own challenges. We are awaiting publication of the Bill and will update further.
The guidance follows on from the retail relief scheme introduced for 2019/20, and identifies the beneficiaries as occupied properties being mainly or wholly used:
1. as shops, restaurants, cafes, drinking establishments, cinemas and live music venues
2. for assembly and leisure
3. as hotels, guest and boarding premises and self-catering accommodation
In a separate announcement it was confirmed that nurseries will also benefit from a rates holiday for one year from 1st April.
Crucially, the guidance explicitly states that any properties that have temporarily closed due to Coronavirus should be treated as occupied and will thus qualify for the relief. We have been actively lobbying for this since the measures were announced, and the inclusion of this adjustment is a sensible and welcomed move.
The guidance also confirms that the Government is seeking EU approval for the relief to be outside of State Aid limits, and advises that local authorities should prepare to award the discount in full.
The guidance also lists property uses which it does not expect local authorities to apply the relief to. These are:
− Financial services (e.g. banks, building societies, cash points, bureaux de change, payday lenders, betting shops, pawn brokers)
− Other services (e.g. estate agents, letting agents, employment agencies)
− Medical services (e.g. vets, dentists, doctors, osteopaths, chiropractors)
− Professional services (e.g. solicitors, accountants, insurance agents / financial advisers, tutors)
− Post office sorting offices
− Casinos and gambling clubs
There will inevitably be uses which are not specifically either included in or excluded from the relief, but as the scheme is to be operated under councils’ discretionary powers applications can be made in deserving cases should councils not automatically apply the 100% discount.
We are maintaining our advice that businesses should not make rates payments on any eligible retail, leisure or hospitality properties for 2020/21. Payments should still be made for office, manufacturing, storage and other non-qualifying properties. We are aware that some local authorities have been taking a proactive approach and are contacting ratepayers to this effect.
The Chancellor also announced additional grant aid to be directed to smaller businesses:
• increasing grants to small businesses eligible for Small Business Rate Relief from £3,000 to £10,000
• providing further £25,000 grants to retail, hospitality and leisure businesses operating from smaller premises, with a rateable value over £15,000 and below £51,000
It is suggested on the Government website that these grants will be administered via Local Authorities and guidance is due to be published later this week.
The Scottish Government has followed the Chancellor by announcing a similar package of measures for business. The Finance Minister confirmed yesterday that:
• 1.6% rates relief for all properties across Scotland, which effectively reversing the planned inflationary increase uplift in the poundage from 1st April 2020
• There will be replication of the package of measures in full announced by Chancellor, including 12 months rates relief for retail and leisure properties. More information will be available imminently with regards to what properties will qualify, but that rates relief should be automatic from 1st April 2020
• Occupiers qualifying for Small Business Bonus Scheme could qualify for a grant of £10,000
• Hospitality subjects with RV between £18,000 and £51,000 eligible for £25,000 grant; clarity as to whether this is per individual property or per company/business is awaited
• Scottish Government will write to all local authorities to reduce burden on ratepayers and react positively on rates holiday requests.
These follow on from earlier announcements that had already promised 75% rates relief for retail, hospitality and leisure sectors with a rateable value of less than £69,000 from 1st April 2020 and relief of up to £5,000 for pubs with a rateable value of less than £100,000. These have been superseded by the latest announcement.
The Welsh Government has announced that they are matching the extension of the rate relief for retail, leisure and hospitality sectors in line with England and Scotland.
In addition, grants will be made available to occupiers of smaller properties in line with the grant scheme proposed for England.
The Northern Ireland Finance Minister has announced a £100m emergency rates package that provides a three-month rates holiday for all businesses from April. We are expecting further assistance and reliefs to be announced in the coming days.
We have today called on the Government to extend the 100% business rates holiday to all firms, regardless of sector. The crisis is going to impact every business, and writing off all rates bills for a year would be a quick and simple way to reduce the fixed costs of UK plc. Extraordinary times demand extraordinary measures.
With the exception of the airline and airport sectors where the Chancellor advised that he was in discussions with the Secretary of State for Transport regarding support, there was no specific mention of other sectors or occupiers of offices, manufacturing facilities and warehouses.
The announcement by the Prime Minister that all schools will close from Friday evening, following similar announcements in the devolved administrations, increases the pressure on all businesses and we are continuing to lobby for those organisations requiring help to be offered relief.
There are potential immediate opportunities for reducing liabilities through empty rate relief and discretionary relief for properties that are becoming partially vacant as staff self-isolate or where there is a drop in production and storage requirements. We are also looking at more long-term issues to reduce liability through the rating system but the main focus for businesses now will be on immediate opportunities.
It is important these possibilities are explored as early as possible; your regular Gerald Eve contact will be in touch to discuss mitigation of your rates liabilities.
We continue to work to ensure you receive the discounts promised and, where there are no specific new measures, that your liabilities are mitigated as much as possible.
Please contact the Gerald Eve team if you have any questions.