Small Business Rates Relief extension and the benefits to the licensed trade
A new business rates relief package is due to take effect from April 2019 and follows the difficulties experienced in the retail and leisure sectors and estimations that two pubs were being forced to close a day across the country. Industry bodies within both the retail and licensed trade sector called for business rates reforms and during Phillip Hammond’s Autumn 2018 budget the chancellor obliged in part.
Over the next two years retailers with rateable values below £51,000 will benefit from a reduction in their rates bills of a third, irrespective of whether they have one property or form part of a national chain. It has been estimated that the measure will benefit 90% of independent, shops, pubs and restaurants; cutting their bills by up to £8,000 and totalling over £900million in business rates relief.
The announcement is a welcome one for operators across the North East, with a general feeling of unease in the market following a number of recent closures, the fall in the value of the pound and of course the uncertainty surrounding Brexit.
The relief has been put in place to tackle the current issues facing Britain’s high streets but this may be seen to just be papering over the cracks, with a more fundamental root and branches reform being needed.
Whilst the savings will undoubtedly assist struggling operators in secondary and tertiary locations, it appears it will do little to impact on bar and restaurant operators within city centres, where rateable values tend to be higher than the £51,000 threshold. Three of the companies that have struggled and closed a number of restaurants in 2018 are Carluccio’s, Jamie’s Italian and Byron Burger and their premises in the centre of Newcastle all have rateable values of over £100,000!
In addition, the relief is subject to EU State Aid limits that will remain in place regardless of Brexit and mean that any one business cannot receive any more than a total of €200,000 grant funding / capital allowances / financial assistance from Government in a three year period.
It will therefore help some but certainly not all businesses and the prime areas and units are likely to be unaffected by it, instead needing to hold on until April 2021 when a new Rating Revaluation should restore some equilibrium between market conditions and the rates payable.