The Chancellor has announced further support for businesses by extending the Business Rates relief for organisations within the leisure, hospitality, and retail industry for a further 3 months with an additional 66% for the remainder of the year.
The 100% business rates holiday for eligible retail, hospitality and leisure businesses in England will be extended to the end of June. For the remaining nine months it will be discounted by two thirds up to a value of £2m for those businesses who have been closed. The discount will be lower for those able to open.
The Budget documents write that the government will “continue to provide eligible retail,
hospitality and leisure properties in England with 100% business rates relief from 1 April 2021 to 30 June 2021. This will be followed by 66% business rates relief for the period from 1 July 2021 to 31 March 2022, capped at £2 million per business for properties that were required to be closed on 5 January 2021, or £105,000 per business for other eligible properties. Nurseries will also qualify for relief in the same way as other eligible properties. When combined with Small Business Rates Relief, this means 750,000 retail, hospitality and leisure properties in England will pay no business rates for 3 months from 1 April 2021, with many eligible businesses receiving 75% relief across the year.”
The government said local authorities will be fully compensated for the loss of income as a result of these business rates measures and receive new burdens funding for administrative and IT costs. It added that it will legislate to ensure that the business rates relief repayments that have been made by certain businesses are deductible for corporation tax and income tax purposes.
The three-month extension to the business rates holiday in England to the end of June will provide £758 million in tax savings to ‘essential retailers’ who have remained open throughout the pandemic, according to the real estate adviser, Altus Group despite the big four supermarkets, discounters and a number of other larger retailers having already repaid £2.16 billion in the relief that they received in 2020/21.
Mark Richardson, Partner at BB&J Commercial said, “The need to support smaller businesses as we emerge from Covid particularly in the hospitality and retail sectors is absolutely essential in kick-starting our economy. These business sectors in particular will be under enormous pressure, and whether this support will be enough of a lifeline remains to be seen. All support from the government is welcome, but more may yet be needed later this year when we see to what extent people do start to spend their money again.”
Graham Bancroft, Partner added, “The extension to the business rates holiday for eligible businesses was a no brainer for the Chancellor as it helps support many businesses that have been forced to close their doors due to the national lockdown. However, whilst the news is welcome for the eligible businesses it covers, it also does not help support the suppliers of these businesses which will have lost considerable revenue due to the lockdown. It also does not help to support businesses which have been forced to work from home under the Government’s instructions. The fact that no help has been given to landlords, who still have to pay empty business rates when a property is unoccupied is also very disappointing at a time when landlords have also been hit hard and need supporting to make sure buildings are lettable for new businesses to want to occupy and thrive when they are allowed”.
