Spring Budget 2021 – Guidance Published

Retail, Hospitality and Leisure Relief

The Government has now published guidance to Local Authorities relating to the administration of the expanded retail, hospitality and leisure scheme for 2021/22. As advised in our update on 3rd March the Chancellor has extend the 100% business rates holiday for eligible properties 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.

Eligibility for the first three months is detailed under Annex A to the guidance and will be in line with this year’s scheme and there is more detailed guidance at Annex B relating to the “closed cash cap” of £2 million as follows:

1) Ratepayers that meet the eligibility criteria for the closed cash cap will be ratepayers who for a chargeable day occupy one or more hereditaments whose use on the chargeable day would, based on the law and guidance applicable on 5 January 2021, have meant that the business or activity would have been mandated to close by the government.
2) For the avoidance of doubt, hereditaments which have closed due to the government’s response to coronavirus should be treated as occupied for the purposes of the closed cash cap.
3) If, under this eligibility test, a person would have been required to close its main, in-person service but could have adapted its business to operate takeaway, click and collect or online with delivery services, it will be considered closed and be eligible for the closed cash cap because its substantive business would have been mandated to close.
4) In cases where hereditaments would have remained open to provide services that can continue as they are exempt from the regulations (e.g. post office services, food banks) the ratepayer may still be eligible for the closed cash cap, because they would have been unable to provide their main in-person service.
5) The following hereditaments do not meet eligibility for the closed cash cap:
a) Hereditaments occupied by businesses and other ratepayers that would have been able to conduct their main service because they do not depend on providing direct in-person services from premises and can operate their services effectively remotely (e.g. accountants, solicitors).
b) Hereditaments whose occupiers may have chosen to close but not been required to.

In our budget update we identified the key fact that the caps are to be imposed at a business rather than property level and there is detailed commentary regarding this policy within the guidance as follows:

Where a ratepayer has a qualifying connection with another ratepayer then those ratepayers should be considered as one ratepayer for the purposes of the cash caps. A ratepayer shall be treated as having a qualifying connection with another:

a) where both ratepayers are companies, and
i) one is a subsidiary of the other, or
ii) both are subsidiaries of the same company; or
b) where only one ratepayer is a company, the other ratepayer (the “second ratepayer”) has such an interest in that company as would, if the second ratepayer were a company, result in its being the holding company of the other.

Perhaps most noticeable is that the cap will mean that for many businesses in qualifying sectors with multiple properties, some of their properties will face a full charge from 1st July.

Businesses will also be required to complete declarations to confirm that the award of any expanded retail discount post 1st July does not exceed the cash cap for 2021/22.

The guidance directs local authorities to give businesses the option to refuse the discount and also directs them to ensure that payments are spread across some or all of the nine months from July 2021 to March 2022 in order that ratepayers will not be asked to make any payments at all during the three month holiday.

Welsh Government Announcement

Not long after the Chancellor completed his Budget Statement on Wednesday afternoon the Welsh Government announced that they would be extending their relief scheme for the full 2021/22 rate year replicating the scheme to apply in Scotland. As for 2020/21 the scheme in Wales applies to retail, leisure and hospitality businesses with rateable values up to £500k however the Minister has also committed to providing businesses and charities in the leisure and hospitality sector with a rateable value of over £500k with 100% rates relief for 2021-22. This now puts most eligible ratepayers in Wales and Scotland at a distinct advantage over those in England.

Restart Grant

At this stage we are still awaiting further information on how the Restart Grant will be administered. From the headline detail announced in the Budget we know that from April 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 We believe that there will be rateable value thresholds with the grant increasing in line with RV bands.

State Aid or Subsidy implications

We have previously reported on the uncertainty regarding State Aid or Subsidy following the end of the Brexit transition period on 31st December. The guidance relating to the business support package in the form of the various Local Restriction Support Grants was updated yesterday to include new guidance on Subsidy.

The document sets out the detailed guidance for Subsidy in line with the principles set out article 3.4 of the EU-UK Trade and Cooperation Agreement (TCA) under the following headings:

• Small Amounts of Financial Assistance Allowance
• Covid 19 Business Grant Allowance
• Covid 19 Business Grant Special Allowance

In summary the guidance confirms that a total potential combined allowance of up to £10.935 million may be available.
(subject to the exact amount applicable under the Small Amounts of Financial Assistance Allowance using the Special Drawing Right calculator)

This is a positive move and means that UK businesses can continue to benefit from Subsidy/State Aid in a similar way to those within the EU.

At this stage we have not had confirmation as to whether the Restart Grants will be covered by these provisions but based on previous grant schemes and Government policy it would appear that this is likely to be the case.

It has been confirmed to us that there are no State Aid or Subsidy implications so far as the Expanded Retail rates relief scheme is concerned and we have been informed that there is no limit on the amount of rates holiday for the first 3 months of 2021/22 that a business can receive.

Further information

We anticipate that more detailed guidance regarding restart grants will be published soon 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.

As ever we are here to discuss any specific issues regarding your properties and will keep you informed of further development regarding business rates across the UK.