Budget 2021: Impact on business rates


I’m sure readers have already been bombarded by an inbox full of budget reviews covering the headline-grabbing elements and I’ve got no intention of regurgitating all of that again. Before I get into the ‘main event’ of business rates changes, it’s worth noting some staggering numbers from the budget preamble – £20bn in grants and £10bn of relief delivered through the business rates system. Completely unprecedented.

Loading all of that pressure onto the 350 councils in England & Wales has pushed some to breaking point. Some were already broken. This has however prompted additional investment in ‘Digitalising Business Rates’ which suggests that business rates is going to be around for some time to come, even though the findings from the review of business rates has been delayed until the autumn. Bearing in mind that local authorities can’t even agree on a consistent template for a rates bill, that’s going to have some challenges. Anyway, I digress…

Expanded Retail Discount, which gives 100% relief to certain qualifying property types, has been extended for three months until 30 June followed by 66% business rates relief for the remainder of the rate year, i.e. until 31/3/22. The press has recently reported that some businesses including Kingfisher, Aldi and Sainsburys have returned up to £2bn in relief granted as part of the Coronavirus measures hastily introduced in March 2020.

To try and counter the criticism of businesses profiteering from bumper trading as well as 100% rates discount, this relief has been capped at £2m per business for properties required to be closed on 5 January 2021, or £105,000 per business for ‘other eligible properties’. This we assume means properties that qualify for expanded retail discount but were not required to close in the latest lockdown.

The devil really is in the detail and we’ll need to carefully review the guidance wording to assess the impact. We’ll report back in due course.

The measures in England and Wales are less than in Scotland where the initially announced three months was hastily extended to 12 after grumblings from businesses.

The freezing of the business rates multiplier in England is a is a bit of a non-event. £600m savings might sound like a lot but for most businesses the impact is miniscule. A property with £100k RV would save…. £200 in 2021/22 and as the rate increases by inflation there will be an ongoing reduction to the end of the Rating List in March 2023. Every little helps as they say…

Of much less relevance to most of us is the creation of business rates-free Freeports, one of which will be in Liverpool and that the Airports and Ground Operations Support Scheme for regional airports has been renewed for a further six months. This covers up to half of their business rates liabilities during 2021-22, subject to a £4 million cap per claimant. Good news for Liverpool Airport with an RV of £4.3m but a small sticking plaster for Manchester Airport which has an RV of £27.6m.

If anyone has any specific questions then please don’t hesitate to get in touch.

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