COVID-19 & Business Rates FAQ - Altus Group Property Services

Do I qualify for any business rates relief on my office or industrial property?

As an office or industrial property type, it is unlikely your property is eligible to benefit from retail rate relief as it does not fall within the Retail, Hospitality or Leisure sectors.

The Government has confirmed that the classification of a property is determined by the SCAT (Sub-Category) code set for the property by the Valuation Office Agency. Properties with SCAT codes in the Retail, Hospitality or Leisure sectors include Shops, Pubs, Cafes, Clubs, Theatres, Restaurants, Music Venues, Hotels, Self-Catering Lets and Showrooms.

If your property is classified as office or industrial yet there is an element of retail use in your premises, contact Altus Group on property@altusgroup.com for urgent advice. In some cases, it is possible to challenge the SCAT code classification to trigger rates relief.

Regardless of eligibility for relief, it is important to review your business rates to ensure that you are not overpaying. Any saving can often be backdated to 1st April 2017, resulting in a refund for overpaid rates.

25/03/2020

Do I qualify for any business rates relief on my retail, hospitality or leisure property?

Prior to 17th March 2020, the qualifying threshold for a property to benefit from business rates relief in the Retail, Hospitality or Leisure sectors was £51,000 or below. Due to the Coronavirus pandemic and the measures taken by Government, this qualifying threshold has been removed.

Under the new rules, any property in the Retail, Hospitality or Leisure sectors, regardless of the level of Rateable Value, will receive 100% relief during the 2020/2021 financial year.

It is anticipated that the relief will automatically be applied to qualifying business rates bills and ratepayers will not need to apply.

25/03/2020

Do I qualify for any business rates relief on my retail mixed use property?

As your property or properties consist of a variety of uses, it is important to establish which of your sites are classified as in the Retail, Hospitality and Leisure sectors, as determined by the SCAT (Sub-Category) code set for the property by the Valuation Office Agency.

Properties with SCAT codes in the Retail, Hospitality or Leisure sectors include Shops, Pubs, Cafes, Clubs, Theatres, Restaurants, Music Venues, Hotels, Self-Catering Lets and Showrooms. If your SCAT code places your property in the Retail, Hospitality or Leisure sectors you will be eligible for 100% business rates relief for the 2020/21 financial year.

If the SCAT code doesn’t place your property in the Retail, Hospitality or Leisure sectors yet there is an element of retail use in your premises, contact Altus Group on property@altusgroup.com for urgent advice. In some cases, it is possible to challenge the SCAT code classification to trigger rates relief.

25/03/2020

If certain rates are set on fair maintainable trade (FMT), after this crisis, the FMT will be next to nothing - what does this mean for business rates?

The Rating Lists (Valuation Date) (England) Order 2018 No. 553 establishes 1 April 2019 as the day by reference to which all non-domestic properties must be valued for the purposes of new local and central non-domestic rating lists when they are next compiled in England.
Further, last week, the Government introduced primary legislation in the House of Lords to bring forward the next revaluation of business rates to 1 April 2021.

Therefore, as things currently stand, the Government’s intent is for the next revaluation cycle to start next year and to set rateable values based upon the facts of fair maintainable trade on a material date almost a year before coronavirus adversely affected trade, which will now be an artificially high level.

Given the economic impact of Covid-19, particularly upon the licensed trade, we believe this is now wholly inappropriate.

We intend to lobby Government to keep the revaluation as originally scheduled in 2022 but to change the 2018 order requiring rateable values to have a new material date of 1 April 2021.

The crisis will, hopefully, be well and truly behind us then and we will have a fuller picture of its financial implication upon trade while allowing time to restore confidence for people to visit licensed properties again.

With the rates holiday during 2020-21, this seems preferable and will certainly benefit the hospitality, leisure and retail sectors with lower bills during the life of the next cycle if it were to start in 2022.

We take the view that during unprecedented times, unprecedented measures are required to help business.

24/03/2020

Will there be any grants for pubs over £51,000 rateable value?

Guidance on the grant funding scheme was issued on Tuesday 24 March by the Department for Business, Energy & Industrial Strategy for England while the Welsh government’s finance minister confirmed its devolved arrangements.

In England, £25,000 will be available for those retail, leisure and hospitality properties with a rateable value within the £15,001 to £51,000 banding, while in Wales, it is within the £12,001 to £51,000 banding, ie, those outside the scope of small business rates relief (SBRR). For those within the scope of SBRR, the grants will be £10,000. The grants are available upon a per-property-basis rather than per business.

The Government has termed the scheme as being for “small business” but, in reality, given the qualifying threshold is for all retail, leisure and hospitality premises with a rateable value of less than £51,000, it is simply aimed at small properties only. This scheme is far from perfect. For example, businesses with a large property estate can claim the grant for each and every property below the qualifying threshold up to a maximum of €800,000 (£728,000) given the temporary framework for EU state aid because the UK is still in transition.

That said, medium-sized properties, just above the rateable value threshold, run by independents for example, as things stand, will receive nothing. The grants are not, therefore, targeted nor based upon need.

In England and Wales, there are 16,036 pubs that fall within SBRR and are now entitled to grants of £10,000 while there are 15,891 pubs eligible for grants of £25,000 subject to EU state aid limits. Sadly, 9,136 pubs above the qualifying threshold of £51,000 in rateable value won’t receive any grant funding as things currently stand.

25/03/2020

Our Rateable Value is £19,500 so we should be eligible for the grant scheme, but again I cannot find details. I have called the Council and they told me to speak to someone else, which I have been waiting for a phone call now for over two days. How can we access these funds to stay afloat? Will we be entitled to the full £25,000? And will the funds be specified for specific purposes or will it be up to our discretion?

Different schemes apply in Wales and Scotland where rates are devolved but this is the position in England.

The Retail and Hospitality Grant Scheme provides businesses in the retail, hospitality and leisure sectors with a cash grant of up to £25,000 per property.

Businesses in these sectors with a property that has a rateable value of £15,000 and under will receive a grant of £10,000.

Businesses in these sectors with a property that has a rateable value of between £15,000 and £51,000 will receive a grant of £25,000.

Under the Small Business Grant Fund all businesses in receipt of Small Business Rates Relief and Rural Rates Relief in the business rates system will be eligible for a payment of £10,000.

The Government has indicated that EU State aid limits of €800,000 will apply to this grant funding.
You are eligible for the grants if:

– your business is based in England
– your business is in the retail, hospitality and/or leisure sector
– or your business receives Small Business Rates Relief and/or Rural Rates Relief

Properties that will benefit from the Retail and Hospitality Grant Scheme will be occupied that are wholly or mainly being used:

– as shops, restaurants, cafes, drinking establishments, cinemas and live music venues
– for assembly and leisure
– as hotels, guest and boarding premises and self-catering accommodation

You do not need to do anything. You will be written to you if you meet the eligibility criteria for this grant.

Once paid, it is for the ratepayer to determine how best to use the grant funding.

Further detailed guidance is available here administering the business grant schemes.

26/03/2020

What changes to business rates will be implemented following the budget and the Chancellors annoucements on Tuesday 17th March?

The main announcement refers to properties in the Retail, Hospitality and Leisure sector benefitting from a full year rates holiday in 2020/21, commencing 1st April 2020.This will come in the form of 100% Relief, with no Rateable Value threshold.

19/03/2020

What properties fall under the description, Retail, Hospitality and Leisure?

Exact details will be published shortly and are likely to be communicated via SCAT (Sub-Category) Codes, these are property description codes used by the Valuation Office Agency. Properties that will be affected include Shops, Pubs, Cafes, Clubs, Theatres, Restaurants, Music Venues, Hotels, Self-Catering, Showrooms etc

19/03/2020

We have multiple sites, will the discount be applied to each of our properties?

Yes, unlike the Small Business Rates Relief this relief will apply to all qualifying properties regardless of portfolio size.

19/03/2020

We now qualify for this Business Rates Retail Discount, should I still be reviewing my Business Rates?

Yes – Reductions can be backdated all the way back to 1st April 2017 and you will receive a backdated rebate for overpayments made. If you have been incorrectly over-assessed you have a statutory right to raise action against this level of value. Altus Group can provide this service without having to commit to any upfront cost.

19/03/2020

This 100% relief will not commence until 1st April 2020, is there anything that can be done to reduce the business rates liability over current and recent months?

Yes – There are a number of different statutory and discretionary reliefs that can be applied for directly with your local billing authority e.g. Restaurants that have been unable to trade since being forced to close their doors & Showrooms operating at a reduced capacity with vacant space. Success of these applications is often heightened if the applications are not made retrospectively.Altus Group have a specialist team, with members from a local authority background, who are best placed to ensure your business rates liability is at a minimum during these turbulent times.

19/03/2020

Our business does not fall within the Retail, Hospitality or Leisure sectors, are there any reliefs we can benefit from or anything else that can be done to reduce our business rate liability?

Yes – There are a variety of reliefs that can be applied to non-retail, hospitality or leisure premises. Applications for short term discretionary relief can be made on under-utilised properties due to reduced staff numbers, reduced manufacturing or reduced stock/storage levels. It is also imperative that you have reviewed your existing level of Rateable Value to ensure that you have not been over-charged, whereby any reduction in value could result in a rebate for overpaid rates back to 1st April 2017.

19/03/2020

I am a franchisee occupying premises under contract, but I don't pay the business rates bill - do I qualify for the grant funding for retail, hospitality and leisure premises?

The criteria for grant funding is that the recipient will be the person who, according to the Council’s records, was the ratepayer for the property on 11th March 2020.

The company/person paying the rates bill are likely to be considered to be the appropriate recipient of any grant funding, subject to EU State aid limits.

Sometimes a local Council will send the business rate bill to the owner rather than the occupier, despite the fact the occupier should be shown as the ratepayer. This is often an administrative convenience because a third party agreement means the rates paid by the occupier will be reimbursed by the owner.

Whether you should properly be the ratepayer will depend on the precise facts of your occupation status and the agreement you have with the owner. You may need to take legal advice on this.

If you should be deemed the ratepayer then the administrative convenience will mean that you currently fall outside the strictly worded rules on who can claim a grant.

One option is to speak to the council and see if they will exercise discretion in the circumstances.

The alternative is to retrospectively change the rates bill into your name so that on 11th March 2020 (the qualification date) you are shown as the ratepayer.

However, even if you do this you need to be prepared for a potential rejection. The guidance note given to Councils is quite badly worded such that it could be read to mean that retrospective changes are ignored. That would clearly, in my view, be beyond the implicit intention of Government to support businesses who, in fact, were the ratepayer on 11 March 2020.

30/03/2020

My rateable value is exactly £15,000 and falls within the retail, hospitality and leisure grant funding scheme. Will I only get the £10,000 grant rather than the higher amount of £25,000?

The grant funding scheme has been designed by reference to the business rates system and its historic reliefs aligned to small business rates relief (SBRR) thresholds.

SBRR provides that, for those properties with a rateable value of between £12,001 to £15,000, relief is tapered going down gradually from 100% to 0%.

For these properties, including those with a rateable value below £12,000 that enjoy a full exemption, the grant will be £10,000.

The grant only rises to £25,000 for those properties outside the threshold criteria for SBRR ie a rateable value over £15,000.

Therefore, a property with a rateable value of exactly £15,000, without the retail discount or rates holiday, are at the threshold at which normal business rates become payable with the tapering having been extinguished but are now being constrained to the lower grant funding despite having had no benefit at all from SBRR.

This is an anomaly and obvious unfairness in the design of the grant funding scheme. It is particularly harsh on for those businesses occupying a property with a rateable value of exactly £15,000.

With thresholds there will always be winners and losers and these are found at the upper end too. In this case, the problem could be substantially alleviated if the Government also tapered the £10,000 and £25,000 grants on rateable values between £12,000 to £15,000.

There are 3,657 retail, leisure and hospitality premises in England with a rateable value of exactly £15,000 in the same predicament.

31/03/2020

I run a bar and catering services on the site of a sports complex, but the site is owned by a registered charity to whom we are contracted to pay a rental fee. We would like to apply for government Coronavirus grant, but we do not pay business rates as we rent only part of the premises.

The Government had to act decisively and quickly to help with the liquidity of small business, particularly in those sectors most adversely affected, and utilising the business rates system, was the easiest and most effective mechanism to do that.

Unfortunately the simplicity needed to enable rapid deployment means that it lacks the ability to reflect the nuances of some businesses’ use of commercial property so there are ‘winners’, ‘losers’ and anomalies. The retail, leisure and hospitality grants are only currently available upon a per property basis and paid to the ratepayer. The contractual arrangement that you have described is not uncommon for many businesses.

It isn’t obvious how the Chancellor could remedy this using the rating system but I agree that it leaves many businesses without access to a grant that is intended for businesses regardless of the particular commercial tenancy status.

07/04/2020

We have recieved our grant funding. Is it taxable? Do I have to declare it as an income and pay VAT on it?

Our understanding is that grant funding will need to be shown as other income in UK accounts and will, therefore, be subject to Corporation Tax to the extent that the relevant business receiving the benefit generates taxable profits in the same financial year.

Further, we are also led to believe that grant funding provided by Government is outside the scope of VAT so there should be no need to apply VAT to its receipt.

However, this is something that should be confirmed by your professional tax advisers.

20/04/2020

Where can I access information from the Government regarding Coronavirus?

The Government has dedicated web resources providing COVID-19 guidance for employees, employers and businesses. The page can be accessed here.

We endeavour to provide the latest advice and will update this page when necessary. Each answer is date stamped, with the information correct at the time of publication. The information provided is for guidance only. It should not be relied upon for any other purpose. Always seek suitably qualified professional advice when making financial decisions. If you are in any doubt and require professional advice, our team can be contacted on 0800 023 5310.