Eligible businesses in property with values below £51,000 will get 100 percent relief and pubs with a value below £100,000 will get a £5,000 discount.
The Government had already announced prior to the Budget that, for one year from 1 April 2020, the business rates retail discount for properties with a rateable value below £51,000 in England would increase from one third to 50 percent and would be expanded to include cinemas and music venues.
In his Budget speech the Chancellor announced a series of measures to provide support to small businesses in response to the coronavirus including a temporary increase in the retail discount to 100 percent for 2020-21 and expansion of the scope of the discount to include hospitality and leisure businesses.
The Government expects the above measures, taken together with existing Small Business Rates Relief, to mean that around 900,000 properties (45 percent of all properties in England) will receive 100 percent business rates relief in 2020-21.
Further temporary measures were announced to support pubs. The Government had already announced the introduction of a one year business rates discount of £1,000 from 1 April 2020 for pubs in England with a rateable value below £100,000. This has been increased to £5,000 in the Budget to support pubs in response to coronavirus.
Eligible businesses should ensure that these discounts are correctly applied to their business rates bill.
In recognition of the fact many small businesses occupying very small properties pay little or no business rates due to Small Business Rates Relief (SBRR) the Government is also providing £2.2 billion of funding to local authorities in England to distribute as grants of £3,000 to around 700,000 businesses currently eligible for SBRR or Rural Rate Relief. For a property with a rateable value of £12,000 this is comparable to three month’s rent.
These measures, which take effect from 1 April 2020, should provide a much needed cash-flow boost to a significant number of small businesses over the next year.
It was also confirmed that the Government is launching a fundamental review of business rates which will report in the autumn. A call for evidence will be published in the spring. HM Treasury have published the terms of reference for this review and its main objectives are:
• reducing the overall burden on businesses;
• improving the current business rates system; and
• considering more fundamental changes in the medium-to-long term.
The work of the review will include looking at improvements that could be made from April 2021, alongside the forthcoming revaluation including regarding the Transitional Relief Scheme which applies to properties in England and limits how much the business rates bill can change by each year as a result of revaluation.
The last business rates review maintained fiscal neutrality so it will be interesting to see how far the Government is willing to go in reducing the overall burden on businesses and longer term support to high street retailers in particular. Business rates raise approximately £25 billion in England each year and are collected by local authorities providing an important source of funding for local services. The tax itself is seen by the Government as being “easy to collect and hard to avoid”.
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