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Coronavirus Resources – Business Rates
Colin Hunter, of Lambert Smith Hampton outlines COVID-19 impact on Business Rates in England
As the impact of the Covid-19 virus continues to sweep across the globe the UK Chancellor has announced various financial packages to help British businesses and individuals weather the storm.
The measures started with the Budget on 11 March 2020 and were rapidly revised in a further announcement on 17 March 2020 and then amended again in Guidance issued on 25th March. The official Guidance from the Ministry of Housing, Communities and Local Government (MHCLG) to local authorities has been issued.
The reliefs and help for museums, galleries, historic houses and tourist attractions are, in part, through business rates. This help comes in the form of a rates holiday for 2020/21 and, for some properties, there will also be a one-off grant.
Rates Relief Scheme
Many property occupiers will benefit from a 100% rates holiday. The affected properties are retail, leisure, hospitality and day nurseries. This grouping is an expansion of the original list of retail properties that were due to get 50% relief as part of guidance issued in January 2019. At that point retail had been defined as including a wide range of shops (including charity shops), restaurants, cafes and bars (among other uses). However, in the Budget the relief was extended to cover hospitality and leisure properties including:
• Museums and galleries;
• Historic houses and stately homes;
• Visitor attractions;
• Hotels and guest houses;
• Holiday homes and caravan parks.
The expanded definition of what is included has now been confirmed in Guidance from MHCLG.
The use is the determining factor and local authorities have some latitude in determining whether a property is eligible. If the property has a mixed-use then, as long as it is wholly or mainly used for one of the qualifying uses, it will qualify for relief. The Budget limited this relief to properties with a rateable value of less than £51,000. The announcement on 17 March 2020 removed the upper limit so that the relief now applies to all qualifying properties.
As well as the reliefs two grant schemes have been announced. These schemes have a base line of the entry in the Rating List that was showing at 11 March 2020. The eligible person is also determined as the ratepayer as at 11 April 2020.
Small Business Rate Relief Scheme and Rural Relief Scheme
This scheme doesn’t apply to properties where Charitable Relief has been granted. However, for charities with a trading subsidiary that is paying rates on a separately assessed property or part of a property, the grant will be available if the rateable value is £15,000 or less and the subsidiary has only one property. There is no restriction on the use that the property is put to in order to qualify for this grant. There are some exceptions to this relief; the main one of concern is that separately assessed car parks won’t receive the grant.
Retail, hospitality and leisure properties
The qualifying properties are the same as those receiving the 100% relief, with two levels of grant available:
1. Properties with a rateable value of £15,000 or less – grant £10,000
2. Properties with a rateable value of more than £15,000 and less than £51,000 – grant £25,000.
There are exceptions to the grant; the main one of concern being that the grant will not be paid for separately assessed car parks.
Changes after 11 March 2020
As the base line is set at 11 March 2020 any subsequent change to the rateable value will not change the grant. Therefore, if an appeal is successful and a property with a rateable value of more than £51,000 is reduced to less than £51,000, back-dated prior to 11 April 2020 the property will still not be eligible for a grant.
Conversely, if a grant of £25,000 is given to a property with a rateable value of more than £15,000 and on appeal that rateable value is reduced to less than £15,000 the original grant remains unchanged. There is an exception in that if the local authority was aware on 11 April 2020 that the rateable value was incorrect and would be altered they can base their decision on whether or not to give a grant and the amount of the grant based on the expected change in rateable value.
Grant payments should be made automatically by the local authority but they must keep a record of who the grants are paid to and how much. The local authorities may therefore need to check that their records are correct. The local authority also has to ensure that their records of who the ratepayer was on 11th March 2020 are correct.
All occupiers of museums, galleries, historic houses, and visitor attractions should see the benefit of the 100% rates relief for 2020/21. However, it may be necessary to check with your local authority to make sure that your property has been correctly identified. The initial sift by the local authority will be based on the entry in the Rating List, but there are a number of properties used for one purpose but given a different description in the Rating List. For example, a transport museum in an old bus shed might be described as a workshop and premises in the Rating List and so, at first glance, would not be eligible for either the relief or a grant (if appropriate). But the reliefs and grants should be based on the actual use not the Valuation Office Agency’s description.
If you are unsure about whether you qualify for either the relief or the grant, Lambert Smith Hampton’s recommendation is to seek professional advice from a qualified rating surveyor. For more information visit www.lsh.co.uk or email firstname.lastname@example.org
AIM Coronavirus resources
All AIM Coronavirus resources can be found here.