What you need to know for your business
The biggest news is that leisure, retail and hospitality businesses with a rateable value of less than £51,000 would be exempt from paying business rates over the next financial year.
There was more unexpected bright news for the smaller of the retail SMEs that are eligible to claim for small business rates relief (SBRR). They were told that they may also be eligible for a £3,000 cash grant while pubs are being given a specific business rates discount from £1000 to £5000.
There didn’t appear to be any business rates help for larger retailers which has annoyed them to say the least.
Approximately only 10% of all retail properties in England are over £51,000 in rateable value but these account for 69% of the overall business rates tax take.
They also help fund small business rates relief through the 1.3p supplement on their standard rate of tax. Their business rates are due to increase anyway as the 1.7% CPI from September is used to set the following financial years business rates.
Business rates seem complicated but the formula for working out their level is simple. Multiply a property’s rateable value (its market rent) by the multiplier (the number of pence-per-pound of rateable value needed to pay tax).
Rates have risen sharply in the past few years because a 2015 revaluation of property values was delayed until 2017. The multiplier has also risen from 34.8p in 1990 to 51.2p this year for stores paying more than £51,000 in rent (rateable value).
Business rates will bring in £25.6bn in England in the coming financial year of which the retail sector will contribute about £6.6bn or a quarter of the overall total.
Winners and losers
John Webber, a prominent business rates analyst said: “Whilst helping SMEs is to be applauded, there’s nothing in the budget that tackles the issues of the larger businesses – and these are the ones shedding the jobs. Without helping larger businesses on business rates, the silent majority is side-lined yet again.
“Promising yet another review of business rates, to be heard in the Autumn seems nonsensical when the issue has already had a detailed review and the Treasury Select Committee gave its recommendations last November, many of which appear to be ignored. “One wonders what was the point of all the expenditure in time and money, if we are purely to review again.
“Unless business rates are properly reformed, as recommended by the Treasury Select Committee, these plans will do nothing to counter the impact of the 2017 business rates revaluation and introduction of downward phasing and simply won’t go far enough to help retailers struggling with their current rate bills.
“We are now destined to see more shop closures and job losses in the high street in the months ahead.”
Kate Nicholls, CEO of UK Hospitality added: “While the measures announced today may give smaller hospitality businesses some breathing room, it’s vital to recognise larger operators, and the huge number they support, but which have today been utterly ignored at a time of business crisis.
“The perverse nature of the current system is underlined by the ongoing coronavirus situation, with punishing payments still expected of companies whose venues may not be able to open or operate.”
The COVID-19 pandemic is creating a unique set of challenges for government and business to overcome.
If you’re worried about what the short and medium term could hold for your business then get in touch with us today.
One of our team of experienced, knowledgeable experts will arrange a free initial chat to talk through what your main concerns are, where your business could be bolstered and other stress points that could be alleviated with timely action and the right strategy.
The only thing certain about COVID-19 is that it’s going to be with us for a while. Don’t keep your fingers crossed and hope it leaves your business alone – take positive action today.