Businesses left waiting for rates discounts as deadline approaches

Businesses in England were promised millions of pounds in support by the chancellor last October but, less than two weeks before the start of the new tax year on 1 April, many are still either waiting for discounts worth up to £8,000 or haven’t yet applied.

The government announced a business rates discount scheme for small sized high street properties in England which have a rateable value below £51,000 at the 2018 Autumn Budget.

Under the scheme, ratepayers are set to receive a one third discount from their bill in 2019/20 and 2020/21 subject to state aid rules which Philip Hammond said would help “up to 90% of all independent shops, pubs, restaurants and cafes.”

However, over 1,000 retail premises in the city of York eligible for the discount have received new tax demands without the discount being applied only to be told that the council was awaiting for software to allow them to calculate and apply the discount.

Richmond Council said just 400 business premises have applied for the new relief so far, out of 1,250 that are eligible. Furthermore, Invest In Bath said less than half of the 800 retailers eligible for the one third discount have so far applied despite demands being sent out.

Additionally, the council in Leicester said it was helping 932 small retail premises adding “the majority of eligible businesses will automatically receive the discount without having to apply for it, although businesses with multiple properties will need to apply to ensure the discount doesn’t exceed European state aid limits.”

Robert Hayton, head of UK business rates at real estate adviser Altus Group, said “history seemed to be repeating itself” referring to the events in 2017 when the government named and shamed councils that failed to pass on £300m in discretionary relief to help businesses affected by the revaluation.

He added: “Councils should apply the discount automatically to those premises not part of a chain and unlikely to be impacted by state aid rules whilst bills could have been manually adjusted to avoid the uncertainty and subsequent cost of rebilling.”

The Local Government Association said it was aware of the issues as are officials at the Ministry for Housing, Communities and Local Government whilst encouraging councils to give out the discount but concede software suppliers have been very slow with their updates and this has posed problems.

A spokesman for the Local Government Association added: “Different authorities will have different approaches – some will send it out automatically and wait for businesses to tell them if they are non-eligible and others will wait for businesses to apply. It is up to councils to establish eligibility.”

The standard tax rate, which applies to all medium and large premises in England with a rateable value over £51,000, and precluded from the new discount, will rise by 2.4% to 50.4p in England on 1 April. It will be the first time the tax rate for business rates in England will have gone above 50% and will add an extra £127.88m to the rates burden in inflation for the retail sector according to Altus Group.