Spring Budget 2021

Retail, Hospitality and Leisure Relief

The Chancellor has confirmed the Government will extend the 100% business rates holiday for eligible properties in the retail, hospitality and leisure sectors for the first three months of the 2021/22 rate year. From 1st July businesses that were required by law to be closed on 5th January 2021 will benefit from a further 66% relief for the remaining nine months of the year, subject to a cap of £2 million per business. Qualifying businesses that were not forced to close will be subject to a cap of £105,000. Crucially, the caps are imposed at a business rather than property level, which will severely limit the upside for even modestly-sized chains.

The decision to extend will be welcomed by those that stand to gain – albeit an earlier announcement would have given businesses more opportunity to plan for recovery – but the ongoing omission of properties in some of the worst-affected sectors continues to disappoint.

As the lockdowns have continued there have been many beyond those occupying the narrow band of eligible properties who have been just as severely impacted, including wholesalers and other suppliers to the retail, leisure and hospitality industries, airport operators and the wider aviation sector, and occupiers of offices which cannot even be partly occupied until the instruction to ‘stay at home’ is lifted. The absence of any expansion of the holiday and additional discounts to these affected sectors – something we called for in advance of the Budget – is disappointing.

In our February update we reported on the announcement in the Scottish Budget that their relief scheme would be continued for the first three months of the 2021/22 rate year which was followed by confirmation that this would be extended for the full financial year subject to funding from Westminster remaining unchanged.

The Scottish Government was clearly making a direct challenge to the Chancellor which he has failed to rise to and businesses in England will be worse off than those north of the border. We await decisions from the Welsh Government concerning any extension to the rates holiday there.

Unfortunately the relief scheme will again not apply to vacant properties. As the lockdown restrictions come to an end and the anticipated recovery kicks in, landlords, investors and developers will have a key role to play. But instead of being supported in this, they face punitive rate demands on empty properties. In addition, businesses who have struggled to stay afloat and have had to take the unfortunate step of rationalising their portfolios have found that their efforts have been thwarted by increases in their fixed property costs at a time when they are fighting to survive.

Airports and Ground Operations Support Scheme

Although the rates holiday in England excluded the aviation sector the government is renewing the Airports and Ground Operations Support Scheme for a further six months from the start of 2021-22. This will provide support for eligible businesses in England up to the equivalent of half of their business rates liabilities during 2021-22, subject to certain conditions and a cap of £4 million per claimant.

Restart Grant

In our update of 22nd October we reported on the introduction of Local Restriction Support Grants to assist businesses impacted by the introduction of Tiered closures or part lockdowns which were continued following the national lockdown from 5th January 2021. In the Budget today the Chancellor announced a new Restart Grant scheme to take effect from April 2021. Non-essential retailers will be entitled to claim grants of up to £6,000 per property, whilst hospitality, accommodation, leisure, personal care and gym businesses will be able to claim grants of up to £18,000 per property.

In February we reported on the uncertainty regarding State Aid or Subsidy following the end of the Brexit transition period on 31st December. The precise position as to amount of aid or subsidy that can be claimed from January remains unclear from the guidance provided to local authorities and we await clarification from Government on this area.

Downwards Transition

We were also hopeful that the Chancellor would take the opportunity to scrap the downwards transition provisions for rate bills for the 2021/22 rate year. Unfortunately this is another opportunity that has been missed and we are in a position where some ratepayers will be facing rate liabilities based on rateable values reflecting rental levels set in 2008.

Fundamental Review of Business Rates in England

Last month the Government announced that the final report on the Business Rates Review – the Fundamental Review – will now be published in the Autumn.

The call for evidence was issued in July 2020 and the preliminary conclusions were initially expected to be made last Autumn, with final conclusions this Spring. It was hoped that this timetable would have allowed for some measures to be implemented by April 2021.Instead we have only been promised a summary of responses on 23rd March 2021.

It is disappointing that this has been delayed once again but we remain hopeful that it indicates that some of the reforms that we have been calling for are being seriously considered.

Further information

We understand that more detailed guidance regarding the extended rates relief scheme and restart grants will be published over the next few days and will provide further updates in due course.

In the meantime if you have any questions please do not hesitate to contact me or your usual Gerald Eve contact.