BIZ BOOST
Half of small firms to pay NO business rates as part of coronavirus action plan
ALMOST half of small businesses in England have been thrown a lifeline in today's Budget with the government promising to abolish business rate taxes.
Chancellor Rishni Sunak says he will scrap business rates for the coming financial year (2020/21) as firms have taken a hit from coronavirus.
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The Conservative manifesto had promised small businesses, such as shops, cinemas, restaurants, and music venues, an increase in their business rates retail discount to 50 per cent.
But as these companies have been particularly badly hit by Covid-19, Mr Sunak says he's today taken the "exceptional steps" of abolishing business rates altogether for a year.
This effectively ups the discount to 100 per cent for companies in the retail, leisure, and hospitality industry with a rateable value below £51,000.
Mr Sunak says this will save businesses up to £25,000 in a tax cut that's worth a collective £1billion.
When it comes to pubs, Mr Sunak added that a promised business rate discount of £1,000 for small pubs with a rateable value of below £100,000 will be increased to £5,000 for this year.
He says too many pubs many have closed, while coronavirus has also been impacted people visiting their local.
The rateable value of a small business is based on an estimate of the rent the property could have commanded on April 1, 2015, according to HW Fisher.
This was decided by the government’s Valuation Office Agency and is due to be revalued on April 1, 2020.
The estimated rent is then roughly halved to give the business rates payable.
HW Fisher says the business rate per square metre could easily be £800 a year in Mayfair, for example, and £100 (or less) in Newcastle Upon Tyne.
Brian Palmer, tax policy expert at the Association of Accounting Technicians (AAT) adds that the discount is good news for pubs.
He said: “This will definitely be particularly good news for the smaller rural pub, many of which will have lower rateable values than their city counterparts.”
What else is the government doing to help businesses?
The move is part of a three-point action plan revealed to tackle the impact of coronavirus on the economy and people's personal finances.
Rates relief is handled differently in , and .
In addition, the government will refund coronavirus-related sick pay that's been shelled out by small and medium-sized businesses.
This will be granted to companies with under 250 employees and the government says it will pay for this in full to cover up to 14 days of sick leave.
Mr Sunak added that this could provide over £2billion for up to 2million businesses.
It comes as 20 per cent of the work force are expected to be unable to work at any one time due to coronavirus.
A coronavirus loan scheme will also be set-up to help small and medium businesses. This will see banks offering loans of up to £1.2million.
The government will guarantee up to 80 per cent of each loan, subject to a total cap per lender.
More on the Budget
Tim Walford-Fitzgerald, partner at accountancy firm HW Fisher said: "It is positive to see the chancellor is able to inject such significant support to small businesses.
"Abolishing business rates for certain small businesses for a year and providing cash grants to others, is a bold step, and will be a relief for business owners across the UK.
“There are almost 6million small and medium sized businesses in the UK potentially be impacted by coronavirus."
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