- Update to business rates relief
Update to business rates relief
Update to business rates relief17th March 2021 - Published by Kuits Commercial Property team
The retail, hospitality and leisure sectors continue to be the hardest hit by the pandemic. In 2020, businesses in these sectors were exempt from paying business rates; that tax holiday was due to end this month, but this will now be extended until the end of June. After that, rates will be discounted to one third of the normal charge for the rest of the financial year.
Business rates relief after June
The specific details of what were announced are as follows:
1. The discount will be extended for three months for eligible properties, at 100% relief, uncapped, for the period 1 April 2021 to 30 June 2021;
2. From 1 July 2021 to 31 March 2022, the discount would apply at 66% relief for eligible properties, 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; and
3. Businesses may choose to opt out of support by providing billing authorities notification of their request to refuse support.
If any of the above criteria apply then no action need be taken as the relief will automatically be applied to the next bill to be issued.
Reviewing the business rates scheme
There has previously been a call to review the business rates scheme entirely but it is likely that this review will now take place in the autumn.
One of the reasons for reform is that business rates are calculated based upon rental values, and currently this is around 50% of annual rents based on rental value in April 2015. The next adjustment is meant to be calculated based on rents as of April 2021 and rates readjusted to this in 2023. The review is likely to result in more frequent valuations to prevent large disparities.
At present, in the middle of a pandemic, there is no clear picture of what values should be, hence the delay to the review.
An alternative to business rates is the possibility of an introduction of an online sales tax on companies.
We await further details of the proposals for a potential overhaul of what many consider to be an outdated system.