Business rates support to shrink for thousands of Covid-hit firms from today
Thousands of businesses across the UK are preparing to restart property tax payments as the current £13.8bn business rates holiday is slashed today.
In April last year, the Government paused business rates for hard-hit retail, leisure and hospitality firms.
Almost 400,000 firms have benefited from the tax break over the past 15 months as part of the Treasury’s financial support package to help the economy back onto its feet.
However, the holiday will end in its current form on Wednesday 30 June, reducing to a 66% discount for companies with a £2m cap on the support they can receive. This reduced package is due to continue until April 2022.
The immediate changes to the holiday will see impacted properties braced for around £5bn in tax liabilities over the rest of the current financial year, according to real estate adviser Altus Group.
A number of retail bosses, including Sports Direct founder Mike Ashley, have been critical of the alterations of the phasing out of the tax break which will result in significant rates bills over the year for larger chains with significant property portfolios.
The continued relief measures will also only be eligible for businesses which were required to close from 5 January.
This continued financial support over the next nine months expected to cost the Treasury around £3.3bn more, according to Altus, taking the total cost to around £17.1bn.
In March, the Government also confirmed that it planned to increase funds available to rate-paying businesses in a move which would also rule out coronavirus-related business rates appeals.
“Material change in circumstances” appeals typically allow rate-payers to seek substantial adjustments to the rateable value of properties.
The Rating Surveyors Association say that the overall value of appeals due to coronavirus are worth around £5bn to firms in England.
However, the Government said it would now provide a £1.5bn pot to councils outside of the retail, hospitality and leisure sectors aimed at those who had suffered the most economically, rather than the normal right to appeal.
Robert Hayton, UK president of property tax at Altus Group, said the recovery of ratepaying firms is being threatened by the changes to appeals.
He said: “With support now tapering off, it is perverse for the Government to be simultaneously legislating against the impact of the pandemic on property values by retrospectively denying hundreds of thousands of firms the ordinary right of appeal to lower their bills.”
Yesterday the Government launched a consultation into making the business rates revaluations more frequent. If approved, the change would see revaluations take place every three years – instead of five. The consultation announced is part of the Fundamental Review of Business Rates which will conclude in Autumn 2021.