The government must reconsider the £2 million cap on business rates relief it is proposing to implement when the rates holiday comes to an end on 30 June, according to Colliers.
In the March Budget, Chancellor Rishi Sunak announced that following the end of the relief period, rates bills would be discounted by two thirds for the remaining nine months of the financial year, up to the value of £2m for closed businesses.
This will leave many large and medium sized pub chains with hefty bills from 1 July, according to John Webber, head of business rates at the commercial property company. He has warned that if the cap is not revised, the systematic closure of pubs and jobs in the sector will continue.
According to research by Colliers, the cap will mean that, on average, the six major pub chains would receive less than 4% relief on their business rates liability – “a far cry from the 66% outlined”.
It has estimated that Greene King – with the highest business rates liability for the period from 1 July 2021 to 31 March 2022 of £101m, would benefit from a 1.97% discount on the nine-month bill. While Stonegate would achieve the highest discount of 8.81% on its £22m bill for the same nine-month period.
Overall for the six largest pub chains, the relief for the nine-month period would be 3.99% on average, with £12m rates relief given – compared to £229m if two thirds relief if there was no cap implemented.
Webber said: “The cap is a sleight of hand. Pub chains were pleased that they received an extension to their business rates holiday- but many are only just waking up to the fact that the cap is for each business group, not each outlet and therefore really limits what most pub chains can expect for the rest of the year.
“This relief certainly won’t be significant enough to make businesses change their strategy concerning any pub closures or redundancies.”
Colliers is recommending a rates holiday of at least six months. “We urge the Chancellor to re-think his strategy before more jobs are lost in the sector,” added Webber.
Reconsider rates cap, or systematic closure of pubs will continue
The government must reconsider the £2 million cap on business rates relief when the rates holiday comes to an end, or many large and medium sized pub chains will be left with hefty bills and business closes will continue, Colliers has warned. According to research by the commercial property company, the cap will mean that, on average, the six major pub chains would receive less than 4% relief on their business rates liability – “a far cry from the 66% outlined” by Chancellor Rishi Sunak for businesses that fall below the £2m cap.