Rate relief explained for a post-Covid world

7th June 2021

Is anyone else a bit lost as to what relief is available for businesses now lockdown restrictions are easing and businesses have started to reopen?

I know we as Managing Agents have worked hard over the past 14 months to keep up to speed with what support is out there for our landlord clients and tenants. We’ve tried to keep that chain of communication flowing, helping to ensure our properties are managed as commercially proactively as possible, and our tenants are applying for what they are entitled to, so they can remain as financially supported as possible.

But as we move into a post COVID-19 world, NG director Jude Weston felt it was time to regroup and have a chat with Alan Burkitt, Business Rates expert at Rowland Burkitt Chartered Surveyors, and our go-to contact for anything Rates related.

So, what is the position now – what are businesses entitled to?

Let’s start with the retail sector; any business who received the retail rates relief and associated grants previously will be able to benefit from paying nil rates (when occupying a property as a tenant, not as a void premises within landlord control) up to 30th June 2021. Between 1st July and 31st March 2022 there is a 66% discount to rates payable.

Alan added:

“Please be aware though that many Councils have not yet issued the correct annual rates bills for 2021/22 – most Local Authorities have said that they will be sending these out in June. Therefore, if you have a bill that currently shows £0 for the year then this will shortly be superseded by a June bill showing a 66% reduction from the 1st of July 2021 to the 31st of March 2022.”

In terms of grants, there is a further restart grant available for non-essential retail of £6,000, a hospitality grant (applicable for hotels etc) and gyms, sports, tanning salons up to £18,000. Liaise with your Local Authority for further details as to how to apply.

Alan said:

“This is in addition to the original COVID-19 grants from 2020-2021 which included the initial lump sum and then grants for local restrictions and lockdowns from November 2020 onwards. Different Local Authorities have different cut offs dates for these grants so again we’d recommend checking with them as soon as possible.

“Grants and rates reliefs are subject to State Aid Limits. In our experience, Local Authorities take different approaches to applying these limits and we would recommend that you speak to them directly if you are in any doubt.”

Notwithstanding the impact to retail and hospitality, many other businesses in lots of different sectors have also been affected, and not been able to occupy their premises due to local and national lockdown restrictions. As occupiers could not use their premises we lodged a large number of rates appeals for our clients against their current rates assessments to reflect the impact of COVID-19. Unfortunately, the Government has announced that it will legislate to ensure that all rates appeals due to COVID-19 are invalid. There were around 400,000 appeals lodged and this step entirely undermines the rating system and 400 years of case law!

The main motivation for this is financial as the cost to the Treasury of the COVID-19 appeals was expected to be in the region of £6 billion. To soften the blow, the Government announced a new £1.5 billion relief fund to be awarded to non-retail, hospitality and leisure properties most affected by COVID-19. The relief, which will be awarded by Local Authorities on a discretionary basis, will ensure support is available to those not within scope of the £16 billion of support already announced for eligible properties in the retail, hospitality and leisure sectors. As ever, details of when this will happen and how funds will be distributed have yet to be confirmed.

So, as you can see there is still financial support out there available to help with continuing to assist businesses during this delicate time.

Alan said:

“The events of the past year are unprecedented with COVID-19 triggering the biggest shock to the economy since World War 2. The Government has undoubtedly provided business with significant support but this has been very much focused on the retail, hospitality and leisure sectors. Office and Industrial occupiers have been left out in the cold in terms of grants and rates relief and the Government making all Covid appeals invalid is a kick in the teeth which has largely gone under the radar of the mainstream media.

“Admittedly, a £1.5bn fund will be put in place but the allocation and eligibility criteria of this have still not been announced. It wouldn’t be right to pass judgement entirely on this fund until there is more certainty around how this money will be distributed but the clock is ticking and this guidance (and grant monies!) are needed urgently by the business community.

“All that said, some good may come out of this. There has long been discussion within the Government of a reform to the business rates system and COVID-19 could act as a catalyst to speed this up. A Government white paper is due in September this year and its contents will make interesting reading. For once I hope that the Government makes substantial, material changes to the system rather than tinker round the edges. Whatever the recommendations are, I wouldn’t expect any change until the start of the next rating list in 2023.”

To find out more, feel free to contact us, give us a call on 0115 958 8599 or email [email protected].