Tax Consultant Carter Backer Winter
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Business rates cut ahead of Budget

Extra business rate reliefs for pubs, music venues, cinemas and offices occupied by local newspapers were announced by the Treasury on 27 January.

13th Feb 2020
Tax Consultant Carter Backer Winter
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In the Queen’s speech at the opening of Parliament on 19 December, she hinted that changes were going to be made to business rates. The government published further details on 27 January for the enhanced reliefs to become effective as of 1 ​April 2020. 

Why the early announcement?

As business rates are charged annually for the year commencing 1 April, any changes in the reliefs available to small businesses have to be announced with enough time for local authorities to adjust the bills for the financial year.

No doubt the Chancellor would have preferred to keep this particular rabbit in his hat until his Budget statement on 11 March, but that would have caused unwelcome costs for local authorities in having to change bills.

What will change?

Local councils will soon start to issue business rate bills for 2020/21 and many businesses will benefit from their bills being reduced further compared to the previous year.

The reason for this is that from 2020/21 the retail discount will be increased to 50% as well as being extended to music venues and cinemas. The 50% relief will apply to qualifying businesses that have a rateable value of less than £51,000.

Cheers at pubs

Pubs, in particular, will be raising a glass or two to celebrate the increased discount as well as a new 'pub relief', gives an overall saving of up to £13,500.

The new pub relief is a £1,000 discount that will be made available to such establishments that have a rateable value of less than £100,000. 

The reliefs will need to be applied in the following order: the first benefit will be from the retail discount, then the £1,000 pub relief is deducted to arrive at the balance.

The eligible pubs which qualify for both reliefs could get up to £13,500 off their annual business rate bill. All reliefs are subject to state aid rules (generally applied to large pubs) and relevant only in England.

Business rates is a devolved tax, so Scotland, Wales and Northern Ireland set their own rules on small business reliefs.

All state aid rules will be reviewed by the government and will no doubt be reformed over the next few years.

More pubs

Whilst we have seen a number of pubs close down over the years, the latest office for national statistics data shows that the number of small pubs and bars has increased for the first time in more than 15 years. The overall number of pubs and bars in the UK has increased by 315, which is a 0.8% increase between 2018 and 2019.  These increases are the first for a decade and the new changes being introduced by the government should help at least 18,000 pubs.

How to get the relief

Whilst the new reliefs should be automatic, businesses may need to apply directly to their local council.  The reduction in business rates will be seen as an assurance that the government has not forgotten the struggles pubs have faced over the last decade.

We will have to wait and see whether the Budget on 11 March 2020 will announce any other changes that will affect pubs or other entertainment venues.

Replies (3)

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By Nefertiti
13th Feb 2020 10:04

Too little too late, so many businesses on the High Street have gone into bankruptcy due to ridiculously high Business Rates. Exorbitant parking charges near the High Street have further forced a lot of customers to shop online instead of risking getting a parking ticket.

In short the conservative government and local councils have killed off a lot of businesses and finally they have realised, that it is having a knock on effect on the taxes they used to collect from the once profitable businesses. Only way to describe this situation is that the government and councils lack basic business and financial sense. It is more like a circus now, with clowns running the country.

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Replying to Nefertiti:
By ireallyshouldknowthisbut
13th Feb 2020 12:00

Id say online has killed the high street, not due to petty concerns about parking etc, but as its simply not a very convenient way to shop. Rent & rates are out of line with the footfall in many places and need to come down sharply, but of course rates follows rents.

The world has moved on, but local councils often stuffed full of retirees have not, and local town centres instead of going with it and transitioning in line with the market and focusing more on restaurants & leisure are clinging onto the past which wont come back, and refusing to rezeone areas from retail to residential.

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By AndrewV12
13th Feb 2020 11:03

Well its great news for pubs, now if they reduced a pint of beer to below £4, they might return to better times.

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