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.
Under the new Retail, Hospitality and Leisure Grant (RHLG) businesses in England in receipt of the Expanded Retail Discount business rates relief (which covers retail, hospitality and leisure) with a rateable value of less than £51,000 will be eligible for the following cash grants per property. To be clear, eligible charities can benefit from both the rates relief and the grants if all the eligibility criteria are met. Detailed guidance from BEIS can be read here and a Technical FAQ for Local Authorities has also been published.
Eligible businesses with a property that has a rateable value of up to £15,000 will receive a grant of £10,000. Eligible businesses in these sectors with a property that has a rateable value of over £15,000 and less than £51,000 will receive a grant of £25,000. The guidance confirms that 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 the RHL grant.
Based on the MHCLG guidance on the Expanded Retail Discount, the hereditaments operated by charities are likely to include: charity shops, museums, galleries, historic houses, sport charity facilities, theatres, public halls (including village halls and community halls), and clubhouses, clubs and institutions. Unfortunately, the 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“.
*Update* Local Authorities are reportedly telling charities that the Government has requested that all grants are paid by 30 April 2020, so the costs etc can be reported. We do not believe that this is a hard deadline (even though it is being presented as such in some cases) but we are checking this urgently with BEIS. If your charity is eligible for the Retail Hospitality and Leisure Grant Fund CTG would encourage you to process your claim as soon as possible, just in case. 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.
*Update* As of 27 April 2020, approximately £7.6bn of the £12.3bn allocated to local authorities for the grant funds had been awarded (61%). This equates to 614,000 grants, from an anticipated 965,000 eligible hereditaments.
Please note that state aid rules will apply to these grants. The total amount of State Aid permissible for one organisation is at present expected to be €800,000 per undertaking, under the COVID-19 EU Temporary Framework for State Aid. Unfortunately this may seriously impact on the practical value of the grant to charities, as any charities with a larger number of properties could quickly exceed this limit (it restrict claims to approx 30 shops). CTG is working with large charity retailers who are considering legal and policy arguments to challenge this limit.
Exclusions to Retail, Hospitality and Leisure Grant include:
- hereditaments occupied for personal uses (eg private stables and loose boxes, beach huts and moorings, Car parks and parking spaces,
- businesses which as of the 11 March were in liquation or were dissolved
- hereditaments with a rateable value of over £51,000
- businesses in receipt of the Small Business Grant Fund (NB not available to charities anyway)