COVID-19 Business Rates Reliefs and Grant Funding available [England only]

In response to COVID-19, the Government has announced a business rates relief package and grant funding for certain small businesses and eligible properties in the retail, leisure and hospitality properties. There has been some uncertainty about whether these apply to charities, so the Charity Tax Group (CTG) has produced a guide including worked examples. The reliefs and grants (all England only) include:

Separate funding schemes are also available in ScotlandWales and Northern Ireland.

As of 10 May 2020, approximately £9.1bn of the £12.3bn allocated to local authorities for the grant funds had been awarded (74%). This equates to 742,500 grants, from an anticipated 965,000 eligible hereditaments [NB these allocations do not include the Local Authority Discretionary Grant Fund)

This guide has been produced to support charities, but should not be seen as definitive or advisory. Government guidance is being updated regularly and this should always be consulted by charities in the first instance. Where appropriate, charities should seek professional advice from ratings advisers and talk directly to Local Authorities.

COVID-19 Business Rates Reliefs and Grant Funding available [England only]
Support measure Expanded Retail Discount Retail Hospitality and Leisure Grant Fund Small Business Grant Fund Local Authority Discretionary Grant Fund
What is it?
  • 100% business rates relief for eligible occupied hereditaments in England 2020-21.
  • For charities this is applied after mandatory (80%) and discretionary business rates relief so will only be relevant if your hereditament does not already receive 100% rates relief.
  • One-off cash grants per eligible occupied hereditaments in receipt of the Expanded Retail Discount. This grant is not re-payable.
  • Hereditaments that have a rateable value of up to £15,000 will receive a grant of £10,000. Hereditaments that have a rateable value of over £15,000 and less than £51,000 will receive a grant of £25,000.
  • One-off £10,000 cash grant per eligible occupied hereditament for organisations in receipt of Small Business Rate Relief or Rural Rate Relief. This grant is not repayable.
  • This additional fund is aimed at small businesses who were not eligible for the Small Business Grant Fund or the Retail, Leisure and Hospitality Fund.
  • Grants of £25,000, £10,000 or less than £10,000 will be granted
Which charity hereditaments are likely to be eligible?
  • A detailed list can be found in the MHCLG guidance on the Expanded Retail Discount. Eligible hereditaments operated by charities include: charity shops, museums, galleries, stately homes and historic houses, holiday lets, sport charity facilities, theatres, tourist attractions, public halls, and clubhouses, clubs and institutions. ACRE has secured confirmation that charity run village halls and community halls are eligible too.
  • However, this is not an exhaustive list and local authorities have discretion to award rates relief and grants to hereditaments broadly similar to those eligible for the reliefs.
  • Few under a strict reading of the rules, due to the requirement to claim Small Business Rates Relief or Rural Rate Relief. We are, however, aware that a number of Local Authorities have exercised their discretion in granting this fund to charities.
  • CTG called for support for small charities unable to claim the other grant funds.
  • The Government has now announced an additional £671m discretionary fund to support organisations unable to access this grant, including charities that would meet the Small Business Rate Relief size criteria.
  • This will be subject to Local Authority discretion but will allow more charities to access funding. Charities will need to show distress and negative impacts of COVID-19.
Are there any restrictions?
  • No, all eligible hereditaments will be granted 100% rates relief.
  • Only hereditaments with a rateable value <£51,000 are eligible for the grant.
  • Charities which would otherwise meet this criteria, but whose bill for 11 March had been reduced to nil by a local discretionary award, should still be considered to be eligible for this grant.
  • Grant will not apply to properties with exemption from business rates. HMRC has told us “This fund has been designed to support the smallest businesses in those sectors which have been hit hardest by the measures taken to prevent the spread of Covid-19. The scheme has been tied to the business rates system and rating assessments, as together these provide a framework for Local Authorities to make payments as quickly as possible”.
  • Organisations receiving the Small Business Grant Fund are not eligible for the Retail Hospitality Leisure Grant Fund and vice-versa.
  • Charities will only be eligible for consideration (as the grant is discretionary) if they would be eligible for Small Business Rates Relief (broadly speaking having a primary property with a rateable value <£15k) or Rural Relief if they did not claim mandatory charity reliefs.
  • The fund is not accessible to any organisations in receipt of other COVID-19 grants such as the Small Business Grant Fund, Retail Hospitality Leisure Grant Fund and Self-Employment Income Scheme. Charities can claim if they have made a claim under the Job Retention Scheme.
  • Charities can benefit from both the rates relief and the grants if all the eligibility criteria are met
Do state aid limits apply?
  • NO. The Government’s assessment is that, given the impact of Covid-19 in the sectors receiving the relief, the business rates expanded retail, leisure and hospitality discount 2020-21 is not a state aid.
  • YES. Each undertaking is limited to a maximum of €800,000 of relief under the COVID-19 Temporary Framework. This limits the practical benefits to charities with more than 30 hereditaments and CTG is working with charity retailers to explore whether additional Government support may be available in these circumstances. We understand that charities can also make use of any remaining state aid under the €200,000 over 3 years state aid de minimis rules.
  • YES. Payments made under this grant can be provided under the existing de minimis rules, provided doing so does not exceed the €200,000 threshold.
  • YES
How can charities access these schemes?
  • No business rates will be payable to local authorities in 2020-21. Bills may have been issued prior to this announcement so will be revised to show no liability. If there is any uncertainty over eligibility of individual hereditaments, charities should talk to local authority rating officers.
  • Many local authorities will pay eligible charities directly or contact charities to request bank details. Most local authorities also have a claim form available on their website. Local authorities will ask recipients of the grant to confirm they have not received this amount of state aid. However, this is not a cliff edge – you can claim up to the full limit. Payments are being made as of April 2020.
  • If your charity is eligible for this Grant CTG would encourage you to process your claim as soon as possible. We understand that in some cases Local Authorities have been sending letters about grants (and PIN codes to enable access) to charity offices, so please try to check for post if your office is closed or contact the Local Authority directly.
  • The funding was provided to local authorities in early April 2020.
  • Local authorities will be publishing application forms in due course.
Is there further guidance available?

Hereditament is the technical term for the property/land subject to the rating assessment and is used in the MHCLG guidance. A definition of hereditament from the Valuation Office Agency can be read here.

You can check the ‘rateable value’ of your property here.

 Worked example

Charity X has 100 charity shops in England[1].

All of Charity X’s shops ARE in theory eligible for the Expanded Retail Discount.

However, 25 of Charity X’s shops already receive 100% business rates relief (80% mandatory relief topped up by the local authority). As a result, they do NOT require the Expanded Retail Discount to be applied.

The following is an example of an occupied charity shop (with a rateable value of £40,000[2]) calculating the Expanded Retail Discount after charity reliefs have been applied.

  • Gross rates (before any reliefs) = £40,000 x 0.512 = £20,480
  • Net rates after charity relief: = £4,096
  • Expanded Retail Discount (100%): = -£4,096
  • Rates due (after charity relief and Expanded Retail Discount): = £nil

25 of Charity X’s shops have a rateable value[3] of >£51,000. These hereditaments ARE NOT eligible for the Retail, Hospitality and Leisure Grant Fund

75 of Charity X’s shops have a rateable value of less than <£51,000. These hereditaments ARE eligible for the Retail, Hospitality and Leisure Grant Fund.

This entitles Charity X to a grant of £25,000[4] per eligible hereditament, BUT state aid limits apply restricting the number of Charity X’s hereditaments eligible for the grant to 28 out of the 75 shops. Just over £1m of the potential grant funding is therefore unavailable.

  • 75 shops x £25,000 grant = £1.875m
  • BUT state aid limit applies = €800,000 (approx. £700,000[5])
  • £700,000 state aid limit/£25,000 grant = 28 shops eligible

Charity X’s charity shops ARE NOT eligible for the Small Business Grant Fund.

[1] These business support packages apply to England only. Different rules apply in Scotland, Wales and Northern Ireland and separate notes will be published in due course.

[2] Example from Annex A: Calculation examples for 2020/21 in the MHCLG guidance. The Expanded Retail discount is always calculated after mandatory relief and other discretionary reliefs funded by section 31 grant. The multiplier used here is provisional.

[3] The rateable value of a business property is its open market rental value on 1 April 2015, based on an estimate by the Valuation Office Agency (VOA). More detail can be found here.

[4] For the purposes of this example we have assumed that all of Charity X’s properties have a rateable value >£15,000. Eligible properties with a rateable value of <£15,000 would be entitled to a grant of £10,000

[5] Approximate currency exchange. The Euro equivalent of the Sterling aid amount is calculated using the Commission exchange rate applicable on the date the aid is offered.