UK & Europe
UK Real Estate Insights
Last week’s Budget included an extension to business rates relief for retail, hospitality and leisure businesses. The latest measures have, however, received some criticism and are seen by many as only the prelude to more fundamental business rates reform.
Following Rishi Sunak's first Budget as Chancellor in 2020, we wrote to highlight the “temporary” 100% business rates relief for retail, hospitality and leisure businesses in England for the 2020 to 2021 tax year.
Sunak’s second Budget last week revisited the issue, extending 100% business rates relief for retail, hospitality and leisure businesses in England until 30 June 2021, after which rates will be discounted by two-thirds from 1 July 2021 until 31 March 2022.
The move has been largely welcomed by occupiers in these sectors, having been hard-hit by restrictions relating to the coronavirus (COVID-19) pandemic for much of 2020 and largely unable to trade for the first quarter of 2021. There has, however, been some criticism of the latest measures in the market, particularly from larger businesses and landlords:
The extended relief comes with a cash cap of £2m for businesses that were required to close as at 5 January 2021, and up to £105,000 for business permitted to open at that date. This could potentially limit the relief available to certain businesses, particularly larger chains, as the cap applies to businesses as a whole rather than individual properties.
The relief was not extended to empty properties, providing no support to owners of buildings which have been left vacant during the pandemic. This means landlords who have not only lost their tenants as a result of the pandemic, and have been largely unable to enforce rental arrears owed, also continue to miss out on the relief offered.
Prior to the Budget, the Government announced that the release of its report in relation to a fundamental review of business rates had been delayed until the Autumn 2021, much to the dismay of the market.
In the British Property Federation's (BPF) press release in response to the Budget, its Chief Executive, Melanie Leech, commented:
Whilst the extension to business rates relief announced in the Budget has offered some welcome respite for certain businesses, it comes with its limitations and many await the Autumn 2021 report to see how the Government proposes to reform business rates in the long term.