COVID-19 & Business Rates

COVID-19 & Business Rates

Throughout the UK, businesses of all sizes are reeling from the effect of the Coronavirus (Covid-19).  On 17 March 2020 the Chancellor announced a range of measures to assist, including a raft of business rates reliefs to be applied to properties in England.  This was swiftly followed by similar (although not identical) measures in Scotland, Wales and Northern Ireland.

These reliefs have since been twice updated, and, as a result, there remains a good deal of confusion as to what they are and who is entitled to them.  In this article DWD’s Head of Rating, Alan Vickery, summarises the position as it currently stands in England, Wales, Scotland and Northern Ireland:

England

  • A business rates holiday for all ‘occupied’ properties wholly and mainly used for retail, hospitality, leisure, nursery and some A2 use class businesses (Estate Agents, Letting Agents) in England from 1 April 2020 until 31 March 2021. The relief will cover all qualifying properties, regardless of the rateable value. Properties which have closed temporarily, due to the government’s advice on COVID-19, should be treated as occupied for the purposes of this relief.
  • Empty rates relief on the grounds of occupation prohibited by law (OPBL) should be available for all businesses forced to close, in order to cover the period up to the start of the above relief scheme.
  • A Small business cash grant of £10,000 for all business in receipt of small business rate relief (SBRR) or rural rate relief.
  • Grant funding for retail, hospitality and leisure businesses of £10,000 for property with a rateable value up to and including £15,000, and a grant of £25,000 for all properties within this sector with rateable values between £15,001 and £50,999.
  • The Government’s assessment is that, given the impact of Covid-19 in the sectors receiving the relief, the business rates expanded retail, leisure and hospitality discount 2020-21 is not a state aid.  However, the Grant Scheme is currently deemed as state aid and subject to the €800,000 Euros limit.

Wales

  • 12 months relief for properties wholly and mainly used for retail, hospitality, leisure, nursery and some A2 use class businesses (Estate Agents, Letting Agents) in Wales from 1 April 2020 in the retail, leisure, hospitality and nursery sectors with a Rateable Value of £500,000 or less (definition as per England).
  • A £25,000 grant for retail, leisure and hospitality properties with a rateable value between £12,000.01 and £51,000 (for each property).
  • It also provides a £10,000 grant to all businesses eligible for Small Business Rates Relief with a rateable value of £12,000 or less.

Scotland

  • 12 months relief for ‘occupied’ properties in the retail, leisure, hospitality and nursery sectors (no RV limit, definition as per England). As with England, the retail, hospitality and leisure relief scheme is not deemed to be state aid.
  • Small businesses who receive the small business bonus scheme or rural relief will be eligible for a £10,000 grant (i.e. RV below £18,000). A grant of £10,000 is available for the first property and £7,500 for each property thereafter.
  • A £25,000 grant for retail, leisure, nursery and hospitality properties with a rateable value between £18,000 and £50,999 (One grant per ratepayer, not per property). As with England state aid provisions apply to the Scottish Grant scheme.
  • Fixed rates relief of up to £5,000 for all pubs with a rateable value of less than £100,000 from 1 April 2020.
  • 1.6% of rates relief will be given for all properties across Scotland, effectively reversing the planned below inflation uplift in the poundage from 1 April 2020.

A £100 million fund has been created to help micro and SME businesses who face immediate cash flow challenges and are ineligible for other schemes. This will typically encompass those business who do not have a prescribed rateable value, such as those who pay ‘inclusive rents’ and those businesses which operate from a home etc. Further details are awaited on

Northern Ireland

  • Business Rates will not be payable for the next three months for all sectors (no NAV limit).  Not applicable to Utilities or Public Sector ratepayers.
  • Rates demands for April 2020 will not be issued until June 2020.
  • A grant of £10,000 will be provided to all small businesses who are eligible for the Small Business Rate Relief Scheme. A grant of £25,000 will be provided to companies in the retail, tourism and hospitality sectors with a rateable value between £15,000 and £50,999 (One grant per company, not per property).

State Aid

It is the UK Government’s assessment that, given the impact of Covid-19 in the sectors receiving the relief, the business rates expanded retail, leisure and hospitality discount 2020-21 is not a state aid.  However, this assessment does not necessarily apply to Scotland and it remains to be seen whether state aid declarations are required there before receiving confirmation that relief has been applied.

At this current time, all the grant schemes detailed above are subject to European Union State Aid rules.  State aid rules regulate public sector intervention, with the aim of ensuring fair competition and the proper functioning of the European single market.

The EU believe that giving unregulated financial support to some businesses would risk distorting competition within the European common market and hinder the long-term competitiveness of the European Union.  This means that the businesses covered by the above schemes can only receive government support up to a maximum level, which, prior to the COVID-19 crisis, was €200,000 in any 3-year period.  With the outbreak of COVID-19 the European Union have adopted a ‘temporary framework’ for State Aid which increases the de minimis limit to €800,000.

Finally

The reliefs and grants announced to date relate predominantly to the retail / leisure and hospitality sectors, and we are aware that many other businesses will be expected to meet their rate demands from the 1 April despite either being closed or severely restricted in terms of their operation. It is possible that further business rates relief schemes will be brought forward in due course.  Should you as a business require any assistance in obtaining relief / grants, or have questions concerning your rights or obligations in respect of business rates at this time, please do not hesitate to contact DWD’s Business Rates team.