UK: Speaking to fellow MPs in the House of Commons, Chancellor Rishi Sunak has announced an abolition of business rates for any business with a property of a rateable value less than £51,000 for the coming financial year.
In his Budget 2020 speech, Sunak confirmed that the government would abolish business rates for most British businesses in a bid to help the economy manage the impact of coronavirus.
Sunak said: “Our manifesto promised that for shops, cinemas, restaurants, and music venues with a rateable value of less than £51,000, we would increase their business rates Retail Discount to 50 per cent. Today I can go further, and take the exceptional step, for this coming year, of abolishing their business rates altogether.”
He continued: “But there are tens of thousands of other businesses in the leisure and hospitality sectors, currently not covered by this policy. Museums, art galleries, and theatres; caravan parks and gyms; small hotels and B&Bs; sports clubs, night clubs; clubhouses, guest houses. They would not benefit from today’s measure – but they could be some of the hardest-hit. So for this year, I have decided to extend the 100 per cent retail discount to them as well.”
“That means any eligible retail, leisure or hospitality business with a rateable value below £51,000 will, over the next financial year, pay no business rates whatsoever,” explained Sunak.
This amounts to a tax cut worth £1 billion, or up to £25,000 for each business. A consultation into the long-term future shape of business rates remains to be smoothed over, and concluded at the Autumn Budget.
Eligible companies for small business rates relief will be allowed a £3,000 cash grant – a total injection of £2 billion for around 700,000 small businesses.
Businesses with fewer than 250 employees will also be granted £2 billion in sick pay to be refunded by the government, as up to a fifth of workers are expected to self isolate and remain within their homes.
The effect of coronavirus on the travel and hospitality industry has been widespread. Only yesterday, The Guardian reported that the industry crisis has sparked “comparisons to [the] 9/11 aftermath”.
According to HospitalityNet, the Baird/STR Hotel Stock Index fell 11.7 per cent in February to a level of 4,296. “Hotel stocks fell off a cliff at the end of the month due to mounting COVID-19 concerns domestically, and the broader stock market correction has disproportionately impacted travel-related stocks,” said Michael Bellisario, senior hotel research analyst and director at Baird. “Increased cancellations and stricter corporate travel policies will impact near-term profitability for both hotel owners and hotel brands; however, the disruption for owners, particularly ones with more urban gateway and group exposure, will be far greater than the impact on the global hotel brands companies.”
Sunak claimed that the response to coronavirus and the measures so far taken amount to “one of the most comprehensive economic responses of any government anywhere in the world to date”.