Business Rates relief for the retail, leisure and hospitality sectors (and for some children’s nurseries)
From 1 April 2020, all occupiers of retail, leisure and hospitality properties are automatically exempt from paying business rates for 12 months as a result of closures in response to the Covid-19 global pandemic.
Generally, business rates are charged on most non-domestic properties like shops, offices, pubs, warehouses, factories, holiday rental homes, guesthouses etc. Your local authority will normally send you a business rates bill in February or March each year, which is for the upcoming tax year (for these purposes, 1 April to 31 March).
The Government has issued guidance to all local authorities to apply a 100% business rates holiday (the “relief”) for the current business rates year (1 April 2020 to 31 March 2021) for the retail, leisure and hospitality sectors.
Ratepayers with more than one property will be entitled to claim the relief for multiple properties (if those properties are eligible).
To be eligible, the property must be wholly or mainly used as a shop, restaurant, cafe, drinking establishment, cinema, live music venue, a venue for assembly and leisure, a hotel, guest and boarding premises or self-catering accommodation. The relief was also recently extended to estate agents and letting agents and to children’s nurseries (provided they are on Ofsted’s Early Years Register and provide care and education for children up to 5 years old). Local authority-run nurseries are not eligible.
The relief will only apply to “occupied” properties. However, properties which have closed temporarily due to the government’s advice on Covid-19 should be treated as occupied for the purposes of the relief. The relief applies to occupiers only but landlords will still be able to rely on the 3 month unoccupied property relief if their tenants go out of business or permanently close. Landlords will still have to pay the ‘unoccupied property rates’ if they are unable to find another tenant for their property within the 3 month timeframe.
Tenants should also stay up to date with the latest government guidance and check the relevant clause of their lease that deals with business rates. Most leases allow a landlord to claim any lost business rates relief (e.g. the 3 month unoccupied property relief), even if it has mistakenly been used by the tenant. Tenants could fall into this situation where the lockdown restrictions are eased but they choose not to go back into occupation and potentially lose the 100% relief and trigger the unoccupied property relief.
At the time of writing, the government assistance does not support business properties in many other sectors where business rates remain payable in full (subject to the normal reliefs), even though most other sectors will undoubtedly experience a knock on effect as a result of the economic disruption caused by Covid-19.
For further information, detailed lists of eligible properties along with worked relief examples can be found on the government website using the following link: