Business rates support tapers off
Businesses and firms across the UK are preparing to restart property tax payments as the current £13.8bn business rates holiday begins to taper off on 30 June 2021.
What will be the revised business rates relief?
From 1 July, and for the remaining nine months of the financial year, the relief from the business rate holiday will reduce from 100% to 66%. This is capped at £2m per business for properties that had to close on 5 January 2021, when the UK entered its most recent major lockdown. The cut to the rate will continue until April 2022.
Impacted properties will be hit by around £5bn in tax liabilities for the rest of the year, according to property Altus Group.
How many businesses benefited from rates holiday?
Around 394,601 businesses benefited from the rates holiday over the last 15 months, which saved businesses collectively around £13.8bn. The further relief is expected to cost the Treasury £3.3bn, taking the total cost of relief to £17.1bn.
Government’s view on Business rates
In the March budget, the government also confirmed that it planned to increase funds available to rate-paying businesses in a move that would also rule out coronavirus-related business rates appeals. The ‘Material change in circumstance’ appeals allows ratepayers to seek substantial adjustments to the rateable value of properties.
The Rating Surveyors Association says that the overall value of appeals due to coronavirus are worth around £5bn to businesses in England.
The government also said it would also 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:
“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.”
In April last year, the Government paused business rates for hard-hit retail, leisure, and hospitality firms.
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.
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