Responding to the possible threat posed by Covid-19 in today’s budget, the Chancellor of the Exchequer, Rishi Sunak, has announced temporary changes to the UK’s business rates regime for retailers and revealed that, on properties with a rateable value less than £51k, there will be no business rates bills for a year. His ‘business rates holiday’ includes the retail and hospitality sectors.
In his statement, the Chancellor said: “Our manifesto promised that for shops, cinemas, restaurants and music venues… with a rateable value of less than £51,000… we would increase their business rates retail discount to 50%.
“Today I can go further, and take the exceptional step, for this coming year, of abolishing their business rates altogether.”
He then added: “Museums, art galleries, and theatres; caravan parks and gyms; small hotels and B&Bs; sports clubs, night clubs; club houses, guest houses. They would not benefit from today’s measure – but they could be some of the hardest-hit. So, for this year, I have decided to extend the 100% retail discount to them as well.
“That means any eligible retail, leisure or hospitality business with a rateable value below £51,000 will, over the next financial year, pay no business rates whatsoever.
“That is a tax cut worth over £1bn, saving each business up to £25,000.”
While the chancellor’s announcement will be welcomed by many small businesses, particularly on the high street, the reality is that this temporary relief might be swallowed up by a loss of revenue caused by a drop in footfall and sales caused by the fears surrounding the spread of the Corona virus. It should also remember that on many bigger properties, larger businesses will not receive this business rates holiday.
We should remember that today’s announcement is just a temporary measure and, no matter how welcome this news is, it does not mask the fact that fundamental reform of the business rates system is still required.
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