In response to the coronavirus, in the Budget on 11 March the Government announced that it would increase the discount to 100% and extend it to include the leisure and hospitality sectors.
This relief will apply to occupied retail, leisure and hospitality properties in the year 2020/21. There will be no rateable value limit on the relief.
How will the relief be provided?
The Ministry of Housing, Communities & Local Government (MHCLG) has confirmed it is not changing existing relief legislation – and will fully reimburse the Council for expenditure on the new relief. Instead the new scheme is introduced by the existing Localism Act (under S47 of the Local Government Finance Act 1988, as amended).
Which properties will benefit from relief?
Properties that will benefit from the relief will be occupied hereditaments that are wholly or mainly being used:
a. as shops, restaurants, cafes, drinking establishments, cinemas and live music venues,
b. for assembly and leisure; or
c. as hotels, guest & boarding premises and self-catering accommodation.
MHCLG consider shops, restaurants, cafes, drinking establishments, cinemas and live music venues to mean:
Hereditaments that are being used for the sale of goods to visiting members of the public:
− Shops (such as: florists, bakers, butchers, grocers, greengrocers, jewellers, stationers, off licences, chemists, newsagents, hardware stores, supermarkets, etc)
− Charity shops
− Post offices
− Furnishing shops/ display rooms (such as: carpet shops, double glazing, garage doors)
− Car/caravan show rooms
− Second-hand car lots
− Petrol stations
− Garden centres
− Art galleries (where art is for sale/hire)
Hereditaments that are being used for the provision of the following services to visiting members of the public:
− Hair and beauty services (such as: hairdressers, nail bars, beauty salons, tanning shops, etc)
− Shoe repairs/key cutting
− Travel agents
− Ticket offices e.g. for theatre
− Dry cleaners
− PC/TV/domestic appliance repair
− Funeral directors
− Photo processing
− Tool hire
− Car hire
− Employment agencies
− Estate agents and letting agents
− Betting shops
Hereditaments that are being used for the sale of food and/or drink to visiting members of the public:
− Sandwich shops
− Coffee shops
Hereditaments which are being used as cinemas
Hereditaments that are being used as live music venues:
Live music venues are hereditaments wholly or mainly used for the performance of live music for the purpose of entertaining an audience. Hereditaments cannot be considered a live music venue for the purpose of business rates relief where a venue is wholly or mainly used as a nightclub or a theatre, for the purposes of the Town and Country Planning (Use Classes) Order 1987 (as amended).
Hereditaments can be a live music venue even if used for other activities, but only if those other activities (i) are merely ancillary or incidental to the performance of live music (e.g. the sale/supply of alcohol to audience members) or (ii) do not affect the fact that the primary activity for the premises is the performance of live music (e.g. because those other activities are insufficiently regular or frequent, such as a polling station or a fortnightly community event).
MHCLG consider assembly and leisure to mean:
Hereditaments that are being used for the provision of sport, leisure and facilities to visiting members of the public (including for the viewing of such activities).
− Sports grounds and clubs
− Museums and art galleries
− Sport and leisure facilities
− Stately homes and historic houses
− Tourist attractions
− Wellness centres, spas, massage parlours
− Casinos, gambling clubs and bingo halls
Hereditaments that are being used for the assembly of visiting members of the public.
− Public halls
− Clubhouses, clubs and institutions
MHCLG consider hotels, guest & boarding premises and self-catering accommodation to mean:
Hereditaments where the non-domestic part is being used for the provision of living accommodation as a business:
− Hotels, Guest and Boarding Houses
− Holiday homes
− Caravan parks and sites
To qualify for the relief the hereditament should be wholly or mainly being used for the above qualifying purposes. In a similar way to other reliefs (such as charity relief), this is a test on use rather than occupation. Therefore, hereditaments which are occupied but not wholly or mainly used for the qualifying purpose will not qualify for the relief. For the avoidance of doubt, hereditaments which have closed temporarily due to the government’s advice on COVID19 should be treated as occupied for the purposes of this relief.
The list set out above is not intended to be exhaustive as it would be impossible to list the many and varied uses that exist within the qualifying purposes. There will also be mixed uses. However, it is intended to be a guide for authorities as to the types of uses that the Government considers for this purpose to be eligible for relief. Authorities should determine for themselves whether particular properties not listed are broadly similar in nature to those above and, if so, to consider them eligible for the relief. Conversely, properties that are not broadly similar in nature to those listed above should not be eligible for the relief.
The list below sets out the types of uses that the Government does not consider to be an eligible use for the purpose of this relief. Again, it is for local authorities to determine for themselves whether particular properties are broadly similar in nature to those below and, if so, to consider them not eligible for the relief under their local scheme.
Hereditaments that are being used for the provision of the following services to visiting members of the public
− Financial services (e.g. banks, building societies, cash points, bureaux de change, short-term loan providers)
− Medical services (e.g. vets, dentists, doctors, osteopaths, chiropractors)
− Professional services (e.g. solicitors, accountants, insurance agents/ financial advisers)
− Post office sorting offices
Hereditaments that are not reasonably accessible to visiting members of the public
How much relief will be available?
The total amount of government-funded relief available for each property for 2020/21 under this scheme is 100% of the bill, after mandatory reliefs and, other discretionary reliefs funded by section 31 grants have been applied, excluding those where local authorities have used their wider discretionary relief powers introduced by the Localism Act which are not funded by section 31 grants.
The eligibility for the discount and the discount itself will be assessed and calculated on a daily basis.
Ratepayers that occupy more than one property will be entitled to relief for each of their eligible properties.
Whilst the UK left the EU on 31 January 2020, the Withdrawal Agreement negotiated by the Government and the EU provides that during a transition period State aid rules will continue to apply as now and will be subject to control by the EU Commission as at present.
The Government has notified the EU of its intention to bring forward an immediate change to the UK’s tax treatment of non-domestic property, in response to the ongoing Covid-19 emergency, and to seek clearance under Article 107(3)(b) of the Treaty on the Functioning of the European Union. Subject to this approval, the Expanded Retail Discount scheme will become a notified State aid. Authorities should prepare to award the discount ignoring de minimis limits and MHCLG will inform them of the outcome of the notification as soon as it is known.