When we commented in these news pages on the Chancellor’s budget statement last week, we expressed concern that the business rates reliefs announced in the budget might not be sufficient to deal with the severity of the effects of the Covid-19 outbreak. Less than a week later the Chancellor has announced a massively extended package business rates measures, which will offer a 100% business rates holiday for most retail businesses and for many businesses in the hospitality and leisure sectors.
The measures were announced by the Chancellor on 17 March and full details were provided by the Ministry of Communities Housing and Local Government the following day. The measures hugely extend the rates relief announced in the Budget. Qualifying properties will pay no rates for the 2020/21 rate year, commencing on 1 April 2020. The relief will be provided as a discretionary relief by local authorities throughout England, with the government reimbursing those authorities for the full cost of the relief. Properties that will qualify for the relief of those that are wholly or mainly being used as shops, restaurants, cafes, drinking establishments, cinemas and live music venues, plus those used mainly for assembly and leisure and hotels, guest and boarding premises and self-catering accommodation.
Shops are treated as including properties used for the sale of goods to visiting members of the public. Some properties used for the provision of services to members of the visiting public also qualify, such as hairdressers, travel agents, dry cleaners and others. The service outlets that will not qualify include banks, building societies, estate agents and others.
Properties used for the sale of food and drink to members of the public will also qualify for the relief, including those providing takeaway food.
These classes of properties are very similar to those that were announced as qualifying for relief in the budget but the key change is that the rates relief will not, now, be subject to state aid limits. The government’s new advice makes clear the intention to bring this package of relief outside the state aid limits and advises local authorities to “prepare to award the discount ignoring de minimis limits”.
The changes to rates relief do not stop there, they also now include properties “being used for the provision of sport, leisure and facilities to visiting members of the public (including for the viewing of such activities)”. This will include major sports stadia, as well as smaller local sports and leisure facilities.
Another class of property now qualifying for rates relief are properties used for the assembly of visiting members of the public. These will include meeting halls and clubhouses.
Finally, the new classes of property benefiting from relief include properties used for the provision of living accommodation as a business. This will include hotels and boarding houses, but also caravan parks and caravan sites.
For all these properties there will be a one-year rates holiday from 1 April 2020. Those properties that were previously benefiting from the retail discount should automatically see a zero rates bill for the coming year. Other properties will need to apply for the relief.
In Scotland, Wales and Northern Ireland separate, and slightly different packages of rates relief measures will apply.
This is rates relief on an altogether unprecedented scale. The Chancellor has clearly made the decision that the virus outbreak requires him to provide rates relief for businesses in a way that we have never seen before. This shows the level of concern in government about the effect of the virus outbreak on the economy. Let us also hope that, when we emerge from the current difficulties, the onerous burden of business rates is also reflected by government in its fundamental review of the business rates system.