Budget 2020: Business rates suspended for shops and cafes - BBC News
Tens of thousands of retail and leisure firms in England will not pay business rates in the coming year.
Tens of thousands of England's retail, leisure and hospitality firms will not pay any business rates in the coming year, the chancellor has announced.

Companies with a rateable value of less than £51,000 will be eligible for the tax holiday, Rishi Sunak said.

The measure applies to firms including shops, cinemas, restaurants and hotels.

It is part of a package of "extraordinary" measures to support the UK economy in the face of disruption from the coronavirus outbreak.

"That is a tax cut worth over £1bn, saving each business up to £25,000," Mr Sunak said.

Business rates are a tax on properties that are used for commercial purposes, and are charged based on an estimate of what it would cost to rent the property on the open market: the "rateable value".

Mr Sunak described the business rates holiday as an "exceptional step" that would benefit museums, art galleries, theatres, caravan parks, gyms, small hotels, sports clubs and night clubs, all of whom will be hard hit if customers stay away to slow the spread of coronavirus.

This video can not be played To play this video you need to enable JavaScript in your browser. Rishi Sunak said the policy would help businesses deal with impact of coronavirus

The chancellor said the business rates system as a whole would be reviewed, with the conclusions published in the autumn. Firms in England have campaigned for several years for the system to be reformed, arguing it makes it hard for bricks and mortar retailers to compete with online rivals.

Business rates in Scotland, Wales and Northern Ireland are set by the devolved administrations.

The head of retail and consumer at Pinsent Masons, Tom Leman, said the announcement would be "extremely welcome news" for small businesses.

"On the basis the coronavirus is not a long-term issue for these businesses, it is crucial that they have the liquidity to see them through the worst.

"This will definitely help the cause and hopefully see many of them come out the other side ready to benefit from the increased spending power prompted by the money people are currently saving on their discretionary spend."

However, some small businesses said the move would not help them. Biju Bubble Tea, based in Soho in London, tweeted that it was suffering the impact of fears around the virus, but would not qualify for relief.

This Twitter post cannot be displayed in your browser. Please enable Javascript or try a different browser. View original content on Twitter The BBC is not responsible for the content of external sites. Skip twitter post by Biju Bubble Tea This article contains content provided by Twitter. We ask for your permission before anything is loaded, as they may be using cookies and other technologies. You may want to read Twitter’s cookie policy, external and privacy policy, external before accepting. To view this content choose ‘accept and continue’. The BBC is not responsible for the content of external sites.

This Twitter post cannot be displayed in your browser. Please enable Javascript or try a different browser. View original content on Twitter The BBC is not responsible for the content of external sites. Skip twitter post 2 by Biju Bubble Tea This article contains content provided by Twitter. We ask for your permission before anything is loaded, as they may be using cookies and other technologies. You may want to read Twitter’s cookie policy, external and privacy policy, external before accepting. To view this content choose ‘accept and continue’. The BBC is not responsible for the content of external sites.

Larger retail and leisure chains are unlikely to benefit from the rates holiday. State aid rules include a cap on the amount of tax relief a business can claim over three years. Most large firms will have already reached the limit as a result of rates relief provided in previous years.

As expected, Mr Sunak scrapped a planned cut to corporation tax. The rate of the tax will remain at 19% rather than falling to 17%.

Another change that was widely anticipated was a cut to Entrepreneurs' Tax Relief. Business owners who sell their firms on were entitled to tax relief on profits of up to £10m over their lifetime. The tax relief has been scaled back rather than abolished, with the lifetime limit reduced to £1m.

This was two Budgets in one: a core Budget with big borrowing and spending plans for the years ahead and an emergency coronavirus Budget.

Although it's primarily a health emergency, the next few weeks and months could be a life-or-death moment for many small businesses who are dealing with the virus - and more importantly, the response to it.

Business rates relief for small firms, an offer to give firms more time to pay tax, and cash grants of £3,000 to virus-affected small firms will be welcomed. But many will feel the criteria are too prescriptive and a more general hardship fund would have been more appropriate for a situation where the impacts are hard to predict.

Yet perhaps more important was the messaging that the government wants to unlock the potential of business. That is a warmer tone to the private sector than the one business has been used to.

The government has acknowledged that business faces financial distress on top of the Brexit preparation that could substantially add to the cost and administrative burden that firms will face at the end of this year.

Mike Cherry, chairman of the Federation of Small Businesses said the chancellor's measures would help reinject optimism into business.

"We're already seeing supply chains disrupted and footfall hurt due to the spread of coronavirus. Against this backdrop, the chancellor's commitments to making more small business finance available, deferring tax bills, reducing business rates and setting up a hardship fund for the vulnerable - including the self-employed who cannot claim SSP - are all absolutely critical," he said.

"The priority at this point needs to be ensuring that these support mechanisms reach the small firms that need them as swiftly as possible."

However, larger businesses would feel left out in the cold, analysts said.

"There is nothing in the Budget that tackles the issues of the larger businesses - and these are the ones shedding the jobs," said John Webber of property firm Colliers. "We are now destined to see more shop closures and job losses in the High Street in the months ahead."

Jerry Schurder, at real estate advisors Gerald Eve, said larger retailers and small firms outside the retail and leisure sectors would still face "huge challenges" from the coronavirus outbreak but were "being left to rot by the Treasury".