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Summary
- The UK Treasury announced an additional business rates relief worth up to £1.5 billion on 25 March in a bid to support to businesses outside of the retail, hospitality and leisure sector.
- The new relief package will be distributed in a more equitable manner by identifying areas most affected by the pandemic instead of a fall in property values.
The UK Treasury announced an additional business rates relief worth up to £1.5 billion on 25 March in a bid to provide support to businesses which were not covered under the previously announced rates relief of up to £16 billion, mostly targeted towards retail, hospitality and leisure businesses.
Chancellor of Exchequer Rishi Sunak said the move would help provide cash strapped businesses with support in a quick and fair manner. Many sectors have been appealing for support as the pandemic represented a material change of circumstance in businesses.
The UK government had extended its rates holiday to retail, hospitality, and leisure businesses to the end of June 2021, during the budget announcement in March. After June, businesses will face a 66 per cent rate discount till the end of the year. The rate holiday will cost the government £11 billion in FY 2020. However, around £2 billion was repaid by supermarkets and other essential retail businesses.
Also Read: Sainsbury (LON:SBRY) and Asda forgo rate relief as retailers return nearly £2-bn
News Support Package Details
The government plans to distribute the new £1.5 billion relief package all across the country-based on businesses which have been most affected, instead of distributing to those on the basis of falling in property values.
Local authorities will be allocated the new support package based on areas where the stock of properties was most impacted by the pandemic. Following which, it will be under the purview of the local bodies to award the relief package to businesses based on their knowledge of the area.
Permanent rate relief
Despite the ongoing rate relief, some of the UK’s largest retailer companies have called for a permanent rate cut. One of the UK’s largest supermarkets Tesco (LON:TSCO) urged the UK government to permanently cut rates to help physical stores survive and compete with online retails as consumer behaviour has increasingly shifted to online shopping amid the pandemic.
Also Read: Why is Tesco demanding a 1% sales tax on online retailers?
(Source: EODHD/Others, Thomson Reuters)
Tesco’s shares closed at GBX 227.70, down by 0.57 per cent on 25 March. Meanwhile, the FTSE 100 index, which it is a part of, closed at 6,674.83, down by 0.57 per cent.
