Business rates holiday ending
However, rates will not go back up to the standard rates but will be reduced by about two thirds (67%) up to £2m for closed businesses with a lower cap for those who have been able to reopen. The reduced rate will be in place for nine months.
Chancellor Rishi Sunak announced the extension of the original business rates holiday in his spring Budget earlier this year (March) and it was welcomed by trade body UKHospitality (UKH) at the time.
Heavily reduced
UKH chief executive Kate Nicholls said: “It is great this fixed cost has been eliminated during the recovery and is heavily reduced for the rest of the financial year. It will give some much-needed breathing room for businesses as they prepare to reopen, though the cap will impact some larger businesses.
"Not all businesses will be able to reopen swiftly, it will take them time to get up and running. They will be burning through meagre cash reserves as they do so, so this extra flexibility is going to crucial in ensuring as many as possible stay alive.
“The forthcoming revamp of the rates system then has to deliver a wholly new system of business tax that no longer unfairly penalises our sector."
Real estate adviser Altus Group analysed Government data and found almost 20% of the 1,987,737 properties liable for business rates had received the holiday (with 727,413 exempt from rates through 100% small business rates relief) – saving firms £13.8bn in rates.
However from 1 July, the discounted rate is expected to cost the Treasury a further £3.3bn – taking the total cost of relief to £17.1bn.
Tapered support
The tapered support for this year will mean total business rates bills across the retail, leisure and hospitality sector will be £5bn overall, Altus Group estimated.
Also in March, the Government revealed it would retrospectively legislate against the ordinary right of ‘material change in circumstances’ appeals, citing the pandemic and its impact on the rental worth of commercial properties.
These appeals would have allowed firms to look at substantial adjustments to the rateable value of properties, reducing the rates payable.
A new £1.5bn pot to councils for discretionary relief will instead be provided but will specifically exclude the retail, hospitality and leisure properties that received the business rates holiday.
Altus Group UK president of property tax Robert Hayton said recovery was being threatened. He added: “With support now tapering off, it is perverse for the Government to be simultaneously legislating against the impact of the pandemic on property values by retrospectively denying hundreds of thousands of firms the ordinary right of appeal to lower their bills.”
