Business rates holiday continues
Good news for the business rates holiday in the Budget. Eligible retail, hospitality and leisure properties will continue to benefit from the current 100% business rates relief until 30 June 2021, extended from 1st April 2021.
Following that, the relief will continue at a lower rate of 66% from 1st July 2021 to 31 March 2022, subject to certain caps (£2 million for businesses on properties that had to close on 5 January 2021, or £105,000 per business for other eligible properties).
The Government is also proposing to publish an interim response relating to evidence collected as part of its review of the business rates system carried out last year. This is expected on 23 March 2021, with a full response later this year once the full effects of the pandemic have been considered. The review looked at reducing the burden of the rating system on businesses, and improving the current system in several main areas -
· Whether the open market value method is the best basis for non-residential property. Currently this works by calculating the annual rent that would reasonably be paid for a hypothetical lease of a particular property on the assumption that before this hypothetical lease began, the hypothetical landlord has put the property in reasonable repair where it is economically reasonable to do so. The repair assumption is made no matter what state of repair the actual property is in, which can lead to a figure that may not reflect reality. This valuation method is not dissimilar to rent reviews in leases, and anyone who has been through a complex rent review might agree that there are better ways.
· Timing – is once every five years still appropriate?
· The effectiveness of reliefs, available pre-pandemic for a range of situations from empty buildings, buildings that are exempt, buildings that are zero rated and buildings that are partially exempt.
· How the multiplier which is applied to the open market value method is set.
· Who should pay the tax (currently most commercial leases place the burden squarely on the tenant).
Posted on 03/11/2021 by Ortolan
