The Chancellor, Rishi Sunak announced the Spring Budget 2020 this week with a real focus on non-domestic rates, providing significant reductions to business rates in England, which are largely centred on the coronavirus disruption that is having a dramatic impact on the economy.
COVID-19 Relief England
With the current and severe threat of COVID-19, the government took the opportunity to provide emergency discretionary rates relief to businesses in England affected by the outbreak during this week’s budget announcement.
The government had already announced that the Business Rates retail discount would be increased to 50% in 2020-21 (for those businesses with an rv less than £51,000) and it will further support small businesses affected by COVID-19 by increasing it further to 100% for 2020-21. The relief will also be expanded to the leisure and hospitality sectors in what is branded “an exceptional step" to significantly help these sectors who will be amongst the worst affected during the coronavirus outbreak.
A Coronavirus Business Interruption Loan Scheme has also been set up to support up to a further £1 billion lending to SMEs, a £2.2 billion grant scheme for small businesses, and a dedicated helpline for those who need a deferral period on their tax liabilities.
The government previously committed to introducing a £1,000 business rates discount for pubs with a rateable value below £100,000 in England for one year from 1 April 2020. To further support pubs, in response to Covid-19 the discount for pubs will now be increased to £5,000.
Business who benefit from Small Business Rate Relief will also be given a cash grant of £3,000 per business.
COVID 19 Relief Scotland
Holyrood has also confirmed it will receive approximately £320m to assist with the pandemic and the Finance Secretary, Kate Forbes has confirmed the following:
- A 75% rates relief for retail, hospitality and leisure sectors with a rateable value of less than £69,000 from 1 April 2020
- An £80 million fund to provide grants of at least £3,000 to small businesses in sectors facing the worst economic impact of COVID-19
- 1.6% rates relief for all properties across Scotland, effectively reversing the planned below inflation uplift in the poundage from 1 April 2020
- A fixed rates relief of up to £5,000 for all pubs with a rateable value of less than £100,000 from 1 April 2020
Additional Rates Relief
The £1,500 business rates discount for office space used by local newspapers in England will also be extended for an additional five years until 31 March 2025.
The government also intends to bring forward legislation imminently to provide mandatory 100% business rates relief for standalone public lavatories in England from April 2020.
Issues with the current Check, Challenge and Appeal system are now well documented and so the government will invest an additional £11.5 million in the VOA in 2020-21 to support the modernisation of VOA systems and processes, to increase efficiency and improve customer service in the future.
Business Rates Review
The Scottish Government commissioned the Barclay Review in 2017 to review business rates in Scotland and various changes have now been enacted under the Non Domestic Rates (Scotland) Bill which was concluded in early February.
A long awaited fundamental review of business rates in England has also been promised which will consider further reforms required to the business rates system and the findings will be reported in the autumn. It is anticipated that a call for evidence will be published in the spring.
“The threat from COVID-19 further emphasises the flaws inherent within the current rating system as there is limited scope to appeal business rates due to exceptional circumstances such as the ones we find ourselves in today.
"The measures announced in the budget do provide much welcomed short term relief to a severe short term threat for many ratepayers, however longer term, only time will tell whether the reform that is needed in England will provide expansive enough support and so we eagerly await the results of the forthcoming review.
"We are also pleased to see the Scottish Government following suit with business rates holidays similar to England's, which will provide additional support to hard pressed businesses at this turbulent time.”
For further information, please don’t hesitate to contact our Business Rates team.