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New £1.5 billion relief fund, but Government legislating against Covid-19 MCC appeals

Government Announces new £1.5 billion rate relief but at the same time is legislating against Covid-19 MCC appeals

The Government has announced a new £1.5 billion rate relief scheme intended to help those who have not benefited from the rates holiday available to retail, hospitality and leisure occupiers. However in the same announcement it confirmed that legislation would be enacted to rule out Covid 19 MCC (Material Change of Circumstance) appeals. Earlier, HM Treasury used the “Tax Day” to publish its interim report on the responses to the Fundamental Review of Business Rates. In this update we consider the impact of these announcements and provide an update on the extended relief schemes and grants available for occupiers of properties in the retail hospitality and leisure sectors.


Additional Business Rates Relief Fund and MCCs

In its statement the Government announced a new business rates relief fund which is intended to provide targeted support to businesses which have been unable to benefit from the existing relief schemes available for businesses with properties in the retail, hospitality and leisure sectors. The relief will be discretionary and administered by Local Authorities, already struggling with the burden of managing the full package of relief and grants introduced over the last year as a result of the pandemic.

In a highly controversial move it was announced that the Government will enact legislation to nullify Covid-19 related MCCs. A Statutory Instrument to prevent new appeals being started has been issued and will be followed by retrospective legislation the intention of which will be to nullify the hundreds of thousands of checks and challenges made on behalf of ratepayers citing the impact of Covid-19 and the measures introduced by the Government since March 2020.

The announcement explains that the £1.5 billion will be distributed to local authorities according to official data on the impact of the pandemic on different sectors. Our initial view is that the limited size of the fund means that many ratepayers will not benefit to anything like the same extent as they could have through the MCC route and the illustrative case studies provided suggest that a business which has seen turnover reduced to nearly nil during the pandemic could see a reduction “for illustrative purposes” of only 15%.

The examples also suggest that many ratepayers with properties where the opportunity to occupy has been limited and for certain periods actively discouraged by Government guidance will be out of scope of the scheme and receive no relief from the full liabilities they have been charged on properties that they have effectively been unable to use.

The scheme applies to England but the devolved administrations in Scotland, Wales and Northern Ireland will receive an additional £285 million through the Barnett formula as a result of the announcement and we await to hear whether they will take similar steps.

The suggestion is that the Government will only issue further guidance as to eligibility for this new relief fund once the relevant Act of Parliament has passed. Given other Parliamentary pressures this may well only occur in the Autumn, following which councils will have to design their own local schemes prior to being in a position to receive applications for relief. This delay and continuing uncertainty is unhelpful – to say the least. We will update you further as information becomes available.


Interim Report – Fundamental Review of Business Rates

The call for evidence for the fundamental review promised initial responses to the first tranche of questions by the Autumn of 2020 and final responses around now. The initial responses were delayed and last month the Treasury announced that responses to all sections would be delayed until Autumn 2021. However on “Tax Day” an interim report was published giving the opportunity for the Government to identify key issues and acknowledge concerns.

It is disappointing that the report offers no new insight into Government thinking and is merely a summary of the responses that were made last year.

It is of some comfort that the representations we made have largely been echoed by many other respondents and we remain hopeful that the Government is still committed to serious reform and will continue to engage with stakeholders over the coming months.


Retail, Hospitality and Leisure Relief and Restart Grants

We reported earlier in the month on the extension of the retail hospitality and leisure relief scheme for the three month period up to 30th June 2021 after which a further relief of 66% is available for the remainder of the year but up to a maximum of £2 million per business that was required to close on 5th January 2021 or £105,000 for those essential retailers that were able to remain open.

Local authorities are now issuing rate demands for the 2021/22 rate year incorporating this relief however it is important to note that due to the limitations of their systems many rate bills will initially be issued showing 100% relief for the full year, to be followed by further demands in July applying the relevant charge for the remaining nine months. This is another administrative burden that businesses could do without.

The Government has also published details of the Restart Grant scheme announced at the budget.

From April non-essential retailers described in the guidance as Strand 1 will be entitled to claim grants of up to £6,000 per property based on the following thresholds based on rateable value as at 1st April 2021:

  • RV £15,000 or under £2,667
  • RV £15,001 – £50,999 £4,000
  • RV £50,000 or over £6,000


Strand 2 of the Grant covers the hospitality, accommodation, leisure, personal care, and gym businesses providing up to £18,000 per property as follows:

  • RV £15,000 or under £8,000
  • RV £15,001 – £50,999 £12,000
  • RV £50,000 or over £18,000


In line with the other grant schemes these will be limited by Subsidy Control in line with the principles set out article 3.4 of the EU-UK Trade and Cooperation Agreement (TCA) under the following headings:

  • Small Amounts of Financial Assistance Allowance
  • Covid 19 Business Grant Allowance
  • Covid 19 Business Grant Special Allowance


In summary the guidance confirms that a total potential combined allowance of up to £10.935 million may be available.
(subject to the exact amount applicable under the Small Amounts of Financial Assistance Allowance using the Special Drawing Right calculator)

In Scotland where the relief scheme has been extended for the full rate year details have now been provided as to how ratepayers must apply for the relief for 2021/22 and we have issued separate guidance on this process.

As ever we are here to discuss any specific issues regarding your properties and will keep you informed of further development regarding business rates across the UK and if you have any questions please do not hesitate to contact me or your usual Gerald Eve contact.

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Key Contacts

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Simon Green

Head of Business Rates

Alan Hampton


Graham Howarth


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