April 8, 2020

COVID-19 UK: Temporary 100% business rates relief for retail, hospitality and leisure businesses

As part of Rishi Sunak's first Budget as Chancellor, the UK Government announced a temporary 100% business rates relief for retail, hospitality and leisure businesses in England for the 2020 to 2021 tax year. This update provides a summary of the properties and businesses able to benefit from this scheme.

Which properties WILL benefit from this relief?

Businesses are eligible for this relief if they are based in England and occupy properties that are wholly or mainly being used:

  • as shops, restaurants, cafés, drinking establishments, cinemas and live music venues;
  • for assembly and leisure; and
  • as hotels, guest & boarding premises and self-catering accommodation.

The Government guidance note for local authorities contains a full list of properties able to benefit from this scheme and can be found here.

On 25 March 2020, the Government announced that this business rates relief would also be available for estate agents, letting agencies and bingo halls that are required to close as a result of the Government's Covid-19 social distancing measures.

The Government has announced, separately, a 100% "business rates holiday" for nurseries for the 2020 to 2021 tax year.  For further details see here.

The above applies only in England, but similar measures have been announced in Scotland and Wales:

  • in Wales all retail, leisure and hospitality businesses with a rateable value of £500,000 or below are entitled to receive 100% non-domestic rates relief in the 2020 to 2021 tax year. For more information see here.
  • in Scotland all non-domestic properties will get a 1.6% rates relief. Retail, hospitality and leisure businesses will get 100% rates relief in the 2020 to 2021 tax year. For more information see here.

Which properties WON'T benefit from this relief

Properties not eligible for relief include those that are being used for the provision of the following public services:

  • financial services (e.g. banks, building societies, cash points, bureaux de change and short-term loan providers);
  • medical services (e.g. vets, dentists, doctors, osteopaths and chiropractors); 
  • professional services (e.g. solicitors, accountants, insurance agents and financial advisers); and
  • post office sorting offices.

How much relief will be available?

100% of the business rates bill for the qualifying property for the 2020 to 2021 tax year, after mandatory reliefs and certain other discretionary reliefs have been applied (i.e. local authorities will apply reliefs such as charitable and rural reliefs, before applying the new discount).  

If your business qualifies, what do you need to do to access the scheme? 

Nothing. The current Government guidance is that businesses shouldn't need to do anything to access the scheme and that the relief should apply automatically from qualifying businesses' April 2020 business rates demands. 

However, local authorities may have to re-issue businesses with a new business rates bill to incorporate this support, if demands had been issued prior to the 2020 Budget. Local authorities should be doing this automatically as soon as possible, but if this has not been received, or if businesses continue to receive full payment demands, it is worth businesses contacting their local authority.

What does this mean for vacant properties?

The relief is stated to apply to "occupied properties".  The Government has confirmed that retail, leisure and hospitality properties that have had to close as a result of the Government's Covid-19 social distancing measures will still be eligible for the relief.

This would, however, suggest that properties that were vacant before the Government's Covid-19 social distancing measures came into force, or become vacant during the 2020 to 2021 tax year, will not qualify for the relief.

What does this mean for landlords?

These measures, together with other Government measures such as the Retail and Hospitality Grant Scheme (for more information see here), should help to ease the financial pressure on business tenants operating in the retail, hospitality and leisure sectors, particularly those that have been forced to close their doors as part of the Government's Covid-19 social distancing measures. 

In turn, this should hopefully help business tenants in these sectors to continue to pay rent and others sums due under their leases (principally service charge and insurance rent) to landlords.

In light of the comments above in relation to vacant properties, landlords with empty properties will continue to be liable for full business rates (following the expiry of any available empty business rates relief).

Other points to note

In the 2020 Budget the Chancellor also announced that there would be a fundamental review of business rates in autumn 2020.  Given the current situation, however, we would expect this review to be delayed.  

This summary does not cover other business rates relief schemes that are available (for example, small business rate relief).

For more information or advice, please get in touch with your usual Clyde & Co contact.