The Expanded Retail Discount scheme: a business rate holiday applies to retail, hospitality and leisure businesses in England for the 2020/21 and 2021/22 tax year as part of measures to support businesses during the outbreak of COVID-19.
At a glance
- A 100% discount on business rates.
- This relief will apply to occupied retail, leisure and hospitality properties in the year 2020/21 and for the first 3 months of 2021/22.
- For the remainder of the financial year, these properties will receive a 66% discount with a cap of £2 million per business for those that were required to close as at 5 January 2021 and a cap of £105,000 per business for those that were not required to close.
- There is no rateable value limit on the relief.
- The eligibility for the discount and the discount itself will be assessed and calculated on a daily basis.
- Local authorities use their discretionary relief powers under section 47 of the Local Government Finance Act 1988 (as amended), to grant relief.
- Existing small business rate relief continues to apply to businesses occupying small premises.
- Repayments of Coronavirus support payments will be tax deducible.
Applies to properties, referred in the guidance as ‘hereditaments’ used as:
- Shops, restaurants, cafes, drinking establishments, cinemas and live music venues,
- for assembly and leisure; or
- as hotels, guest and boarding premises and self-catering accommodation.
- Since it was announced the scheme has been extended to estate agents, letting agents and bingo halls.
To qualify for the relief the hereditament should be wholly or mainly being used for qualifying purposes. This is a test on use rather than occupation.
Hereditaments that will not qualify for relief:
- Financial services e.g. banks, building societies, cash points, bureaux de change, short-term loan providers.
- Medical services e.g. vets, dentists, doctors, osteopaths, chiropractors.
- Professional services e.g. solicitors, accountants, insurance agents/ financial advisers.
- Post office sorting offices.
Tax deductibility of business rates repayment
- Legislation will be included in Finance Act 2021 to ensure that where businesses repay Coronavirus support or relief, (e.g. business rates), to a public authority, the business will be able to claim an Income Tax or Corporation Tax deduction equal to the payment.
- The deduction will be due in the same accounting period as the original liability would have been due and paid.
- The amount of deduction will be limited to the original liability and that liability must have been deductible in calculating the taxable profits of the business had the liability not been removed through Coronavirus support or relief.
- This legislation will have retrospective effect.
Business Rates Local Authorities Expanded Retail Discount Guidance
Tax deductibility of business rates repayment