Covid-19 Government Measures for Business Rates

The Government has provided detailed guidance on the measures announced to support businesses.

The measures providing relief from Business Rates announced by the Chancellor Rishi Sunak only relate to England.  The Governments for Wales and Scotland have also announced measures to support business.

England

In summary no rates will be payable on most occupied retail, leisure and hospitality properties for the 12 months commencing on 1 April 2020. This is subject to the EU approving the revised state aid measures proposed by the Government.

• The relief is being granted by an adaption of the existing Retail Discount Scheme which first commenced on 1 April 2019
• For the 2020/21 rate year the discount is being increased to 100% and the Rateable Value cap of £51,000 is being removed meaning that 100% relief will apply regardless of the level of the Rateable Value on the property
• The scheme is also being extended to the leisure and hospitality sectors.
• This relief will apply to “occupied retail, leisure and hospitality properties in the year 2020/21”.  Further clarification has been provided stating that “For the avoidance of doubt, hereditaments which have closed temporarily due to the government’s advice on COVID19 should be treated as occupied for the purposes of this ”

How much relief will be available?

• The total amount of government-funded relief available for each property for 2020/21 under this scheme is 100% of the bill
• Ratepayers that occupy more than one property will be entitled to relief for each of their eligible properties.

Which properties will benefit from relief?

There are three categories of occupied properties which are being granted the rates relief:

• Shops, restaurants, cafes, drinking establishments, cinemas and live music venues
• Properties used for assembly and leisure
• Hotels, guest and boarding premises and self-catering accommodation

Category 1 - shops, restaurants, cafes, drinking establishments, cinemas and live music venues

The Government consider shops, restaurants, cafes, drinking establishments, cinemas and live music venues to mean the following:

Properties which are being used for the sale of goods to visiting members of the public

• Shops (such as: florists, bakers, butchers, grocers, greengrocers)
• Jewelers
• Stationers
• Off licences
• Chemists
• Newsagents
• Hardware stores
• Supermarkets, etc
• Charity shops
• Opticians
• Post offices
• Furnishing shops/ display rooms (such as: carpet shops, double glazing)
• Car/caravan show rooms
• Second-hand car lots
• Markets
• Petrol stations
• Garden centres
• Art galleries (where art is for sale/hire)

Properties used for the provision of the following services to visiting members of the public:

• Hair and beauty services (such as: hair dressers, nail bars, beauty salons, tanning shops, etc)
• Shoe repairs/key cutting
• Travel agents and ticket offices e.g. for theatre
• Dry cleaners and launderettes
• PC/TV/domestic appliance repair
• Funeral directors
• Photo processing
• Tool hire
• Car hire

Properties being used for the sale of food and/or drink to visiting members of the public:

• Restaurants
• Takeaways
• Sandwich shops
• Coffee shops
• Pubs
• Bars

Properties being used as cinemas

Properties being used as live music venues:five things

• The relief will apply to live music venues which are wholly or mainly used for the performance of live music for the purpose of entertaining an audience. Properties are not considered to be a live music venue for the purpose of rates relief where the venue is wholly or mainly used as a nightclub or a theatre, for the purposes of the Town and Country Planning (Use Classes) Order 1987 (as amended). There are further guidelines in relation to qualification as a live music venue.

Category 2 - assembly and leisure

The Government consider assembly and leisure to mean:

Properties that are being used for the assembly of visiting members of the public

• Public halls
• Clubhouses, clubs and institutions

Properties being used for the provision of sport, leisure and facilities to visiting members of the public (including for the viewing of such activities).

• Sports grounds and clubs
• Museums and art galleries
• Nightclubs
• Sport and leisure facilities
• Stately homes and historic houses
• Theatres
• Tourist attractions
• Gyms

Category 3 – hotels, guest and boarding premises and self-catering accommodation

The Government consider hotels, guest & boarding premises and self-catering accommodation to mean:

Properties where the non-domestic part is being used for the provision of living accommodation as a business:

• Hotels, Guest and Boarding Houses
• Holiday Homes
• Caravan Parks and sites

Test on use

To qualify for the relief the property should be wholly or mainly being used for the above qualifying purposes. This is a test on use rather than occupation. Therefore, properties which are occupied but not wholly or mainly used for the qualifying purpose will not qualify for the relief. The Government have made it clear however that properties which have closed temporarily due to the government’s advice on COVID19 should be treated as occupied for the purposes of this relief.

Properties not qualifying for relief

The list below sets out the types of uses that the Government does not consider to be an eligible use for the purpose of this relief.

Properties being used for the provision of the following services to visiting members of the public:

• 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

Properties that are not reasonably accessible to visiting members of the public

EU state aid

The Retail Discount Scheme has previously been subject to a €200,000 cap on total aid which a company can receive over a rolling three year period.  Whilst the UK left the EU on 31 January 2020, the Withdrawal Agreement negotiated by the Government and the EU provides that during a transition period State aid rules will continue to apply.

The Government has notified the EU of its intention to bring forward an immediate change to the UK’s tax treatment of non-domestic property, in response to the ongoing Covid-19 emergency.  Subject to this EU approval, the expanded rates relief scheme will become a notified State aid and Local councils have been advised to prepare to award the rates relief ignoring the previous cap.

2020/21 Rates Bills

Many of the rates bills for 2020/21 were already issued prior to the new measures being announced.  The Government has advised every Local Council however that “Given the importance of this additional support for local businesses, we would encourage authorities to do all you can to ensure that revised bills are issued as quickly as possible to qualifying ratepayers and confirm that they will not need to pay any rates for this year.”

Nurseries

A separate Nursey Discount is being introduced that will provide relief to properties occupied by providers on Ofsted’s Early Years Register and which are wholly or mainly used for the provision of the Early Years Foundation Stage.

Scotland

In Scotland the Government has confirmed that “Retail, hospitality and leisure businesses will get 100% rates relief. To get this relief, a property has to be occupied.” The Scottish Government have advised that they are working with Scotland’s 32 Councils to make sure this relief is administered in the most effective way”.

Wales

In Wales the Government have confirmed that “All retail, leisure and hospitality businesses will receive 100% non-domestic rates relief in 2020-21.  This enhanced retail, leisure and hospitality relief scheme, in combination with our existing Small Business Rates Relief scheme, will ensure that over 70,000 businesses in Wales will pay no rates at all in 2020-21”.

23 March 2020