The British Government announced the year-long business rates holiday in March to keep grocers afloat and ensure food security during the COVID-19 pandemic. But what exactly does the holiday mean? Why did it come about, and how will it impact the industry? Let’s discuss. This article will discuss the benefits and negative impacts of the business rates holiday, as well as how the extension will affect supermarkets.
The British retail industry has warned that the effects of a business rates holiday could be disastrous for the sector. Most businesses that were eligible for a rates holiday in 2020 and 2021 will also be exempt from paying these fees. But, the cap will cover a tiny proportion of their total liability. And the economic recovery may not even continue by the autumn. That is why the chancellor must monitor the impact of business rates relief.
A government report has warned that a 10 per cent fall in sales would put two-thirds of U.K. supermarkets into negative cash flow. It is estimated that sales have fallen by 70 per cent since the lockout began on 23 March. Despite the negative impact of the holiday, government policies are providing significant short-term support to the industry. The 12-month business rates holiday, the Job Retention Scheme, Coronavirus Business Interruption Loan Scheme, and the COVID-19 Corporate Financing Facility have addressed the majority of the costs for retailers.
The delay in revaluation has caused considerable concern among retailers. Originally, rates were due to be revalued in 2021, but now they will be based on property values from 2015, which predate Brexit and Coronavirus. These artificially high rates will stay in place until April 2023. While the government has acknowledged that the UK has faced exceptional challenges in recent years, it has decided to delay the revaluation for two years. It is the only solution that will give ratepayers some certainty over their monthly bills.
A business rates holiday could prove to be a welcome relief for struggling retailers and a boon for the UK economy, but which firms will benefit most? It is important to note that non-essential retailers have been hit hard by the Covid-19 pandemic and need continued financial support to survive. Chancellor Rishi Sunak has announced an additional PS6,000’restart’ grant for businesses that do not have to pay their rates until the end of June. The government should build on this positive news story and extend business rates relief for non-essential retailers, especially those facing the greatest hardship.
The government’s business rate holiday has helped a number of businesses in the UK, particularly those in the retail and hospitality industries. However, the crisis has forced many to close their shops. Many businesses have been affected by the Covid-19 legislation and faced difficult times, and they have been left with no choice but to close. This has put enormous pressure on these businesses and has led to a business rates holiday.
Several businesses will benefit from business rates holiday, including betting shops and estate agents. In addition to the supermarket industry, many other sectors will benefit from the holiday. Estate agents and betting shops are more resilient to the financial crisis, so this measure could help them. However, some sectors will remain affected by the business rates holiday, such as the bureau de change sector. Businesses that qualify for business rates relief will be able to save up to 75% on their business rates bill in the upcoming year.
The benefits of the business rates holiday for the supermarket industry are not clear-cut, however. A major competitor of Tesco argued that the supermarkets should be giving this money to the NHS instead of handing it over to the government. In the meantime, the supermarket industry is enjoying a PS3 billion boost in sales. While this is good news for the supermarket industry, the future for non-food retailers looks even more bleak.
Chancellor Rishi Sunak has rejected calls for a two-year extension of the business rates holiday for the supermarket industry. While the holiday would have provided the industry with much-needed breathing space, it will not help non-food retailers whose high rates will have to be repaid in April. Retailers will have missed out on a crucial trading period, and will face a hefty bill when the holiday ends.
To avoid the impact of increased rates, the Chancellor has decided to grant a three-month extension of the existing holiday. This will result in nine months of discounted rates for qualifying small businesses. This means qualifying businesses will pay only seventy percent of their total business rates bill in the coming year. Further, this will help the industry recover quicker. However, the Chancellor has rejected a similar scheme in Scotland. The scheme has already been in place for nine months, and is aimed at helping small businesses avoid the hefty cost of business rates.
The Government has also been urged to extend the business rates holiday for the supermarket industry, which was introduced due to the coronavirus pandemic in March. The current holiday applies to the 2020/21 tax year. However, the Chancellor has made clear that future removal of the relief should be tapered. As a result, business rates in London are due to be reinstated in April 2021. The government’s decision will be an important step in the restoration of confidence in the UK’s economy.
There are three types of businesses that pay business rates. Those who pay these rates are not listed on the website of the LPS. However, self-catering holiday accommodation, B&Bs, guest houses, privately run caravan and camping sites, and tourist attractions. The other category is retail and includes all types of shops, apart from larger food stores. However, the extension of the holiday does not apply to other types of business such as fast food outlets, travel agencies, and auction houses.
While the government is considering the extension of the business rates holiday, it is clear that it should first change the law and remove any existing loopholes that hamper the supermarket sector. Retailers have long demanded reform of the business rates system and hope that the new law will result in long-term changes. The British Chambers of Commerce has said the chancellor has listened to their long-standing calls for reform. It is not clear how the business rates holiday will affect the industry, but they are glad that this has at least given them some breathing space.
Several industries are set to benefit from a business rates holiday that has been extended until June. Retailers, however, are not the only ones to benefit. Independent retailers were also welcomed the package. Retail NI chief executive Glyn Roberts welcomed the package and called for further reform of the business rates system. In particular, the PS50m package will provide much-needed relief to the retail sector, as the price of food is high and the competition is fierce.
The government is conducting a fundamental review of business rates, which is currently in effect. The government has conducted several reviews over the last decade without making any major changes. However, a recent report stated that the government is looking into ways to support businesses struggling with rates bills. The government has said there will not be an increase in rates next year. However, the government has previously increased bills in line with inflation. This means that supermarkets are unlikely to feel any impact from the rates holiday until March 2021.
A further measure to boost the retail sector is a business rates holiday. This can help small retailers, including supermarkets. The discount is available for businesses that have an annual revenue of under £20m. The government’s announcement has given businesses a chance to cut costs without having to reduce profits. The cap on rates relief will cover only a fraction of a retailer’s total liability. It is therefore vital that the chancellor keeps a close eye on the business rates relief to ensure that they don’t negatively impact the industry.
While the Chancellor’s Spending Review has failed to extend the business rates holiday for the retail sector, it will give the industry some time to recover. The cost of business rates will have a huge impact on non-food retailers, as these companies missed out on the lucrative November trading period. Despite this, the new policy is still a positive development for the UK retail sector. The new government will also look into extending the holiday.