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Expanded retail discount policy

Expanded retail discount policy 2021-2022.

Contents

  1. Introduction
  2. Eligibility
  3. Excluded categories
  4. Value of discount
  5. Cash caps
  6. Appeals
  7. Policy review
  8. Appendix A: Calculation examples for 2021-2022
  9. Appendix B: Eligibility for the Closed Cash Cap (£2 million)

1. Introduction

1.1

Leicester City Council (‘the Council’) is directed by government to provide a business rates Expanded Retail Discount Policy.

1.2

Since 2019/20 the government has provided a Business Rates Retail Discount for retail properties which for 2020/21 it expanded to include the leisure and hospitality sectors. On 3 March 2021 the government confirmed that the Expanded Retail Discount would continue to apply in 2021/22:

  • at 100% for three months, from 1 April 2021 to 30 June 2021
  • at 66% for the remaining period, from 1 July 2021 to 31 March 2022

1.3

The government confirmed that there would be no cash cap on the relief received for the period from 1 April 2021 to 30 June 2021. From 1 July 2021, relief will be capped at £105,000 per business, or £2 million per business where the business is in occupation of a property that was required, or would have been required, to close, based on the law and guidance applicable on 5 January 2021.

1.4

This Business Rates Expanded Retail Discount (‘the Retail Discount’ or relief) will be available from 1 April 2021 and will be applicable to the financial year 2021/22 only.

2. Eligibility

2.1

In order to be eligible for the Retail Discount, the property in question must be an occupied hereditament and wholly or mainly being used:
  1. as a shop, restaurant, café, drinking establishment, cinema or live music venue;
  2. for assembly and leisure; or
  3. as hotels, guest and boarding premises and self-catering accommodation.

2.2

Shops, restaurants, cafés, drinking establishments, cinemas and live music venues are considered to mean:
  1. Hereditaments that are being used for the sale of goods to visiting members of the public, and/or:
    • Shops (such as florists, bakers, butchers, grocers, greengrocers, jewellers, stationers, off licenses, chemists, newsagents, hardware stores and supermarkets);
    • Charity shops;
    • Opticians;
    • Post offices;
    • Furnishing shops/display rooms (such as carpet shops, double glazing, garage doors);
    • Car/caravan show rooms;
    • Second-hand car lots;
    • Markets;
    • Petrol stations;
    • Garden centres;
    • Art galleries (where art is for sale/hire).
  2. Hereditaments that are being used for the provision of the following services to visiting members of the public, and/or:
    • Hair and beauty services (such as hairdressers, nail bars, beauty salons, and tanning shops);
    • Shoe repairs/key cutting;
    • Travel agents;
    • Ticket offices, for example for theatre;
    • Dry cleaners;
    • Launderettes;
    • PC/TV/domestic appliance repair;
    • Funeral directors;
    • Photo processing;
    • Tool hire;
    • Car hire;
    • Employment agencies;
    • Estate agents and letting agents;
    • Betting shops.
  3. Hereditaments that are being used for the sale of food and/or drink to visiting members of the public:
    • Restaurants;
    • Takeaways;
    • Sandwich shops;
    • Coffee shops;
    • Pubs;
    • Bars;
  4. Hereditaments which are being used as cinemas;
  5. Hereditaments that are being used as live music venues:
    • Live music venues are hereditaments wholly or mainly used for the performance of live music for the purpose of entertaining an audience. Hereditaments cannot be considered a live music venue for the purpose of business rates relief where a venue is wholly or mainly used as a nightclub or theatre, for the purposes of the Town and Country Planning (Use Classes) Order 1987, as amended.
    • Hereditaments can be a live music venue even if used for other activities, but only if those other activities are merely ancillary or incidental to the performance of live music (for example, the sale/supply of alcohol to audience members) or do not affect the fact that the primary activity for the premises is the performance of live music (for example, because those other activities are insufficiently regular or frequent, such as a polling station or a fortnightly community event).
    • There may be circumstances in which it is difficult to tell whether an activity is a performance of live music, or instead the playing of recorded music. Guidance on this may be found in Chapter 16 of the statutory guidance issued in April 2018 under section 182 of the Licensing Act 2003.

2.3

We consider assembly and leisure to mean hereditaments that are being used for:

  1. The provision of sport, leisure and facilities to visiting members of the public (including for the viewing of such activities):
    • Sports grounds and clubs;
    • Museums and art galleries;
    • Nightclubs;
    • Sport and leisure facilities;
    • Stately homes and historic houses;
    • Theatres;
    • Tourist attractions;
    • Gyms;
    • Wellness centres, spas, massage parlours;
    • Casinos, gambling clubs and bingo halls.
  2. The assembly of visiting members of the public:
    • Public halls;
    • Clubhouses, clubs and institutions.

2.4

We consider hotels, guests & boarding premises and self-catering accommodation to mean hereditaments where:

  1. The non-domestic part is being used for the provision of living accommodation as a business:
    • Hotel, guest and boarding houses;
    • Holiday homes;
    • Caravan parks and sites.

2.5

To qualify for the relief, the hereditament should be wholly or mainly being used for the above qualifying purposes on any chargeable day. In a similar way to other reliefs (such as charity
relief), this is a test on use rather than occupation. For the avoidance of doubt, hereditaments which have closed temporarily due to the government’s advice on COVID19 will be treated as occupied for the purpose of this relief.

2.6

The lists set out above are not intended to be exhaustive, as it would be impossible to list the many and varied retail uses that exist within the qualifying purposes. Properties may also receive relief if they are considered by the Council to be broadly similar in nature to those outlined in 2.2 to 2.4.

2.7

The Council will determine in each individual case when, with regard to all relevant legislation and guidance, to grant the Retail Discount under section 47 of the Local Government Finance Act 1988 (‘Section 47’).

2.8

The ratepayer has the option under this policy to refuse the discount for each eligible hereditament anytime up to 30 April 2022 and cannot withdraw this refusal for either all or part of the financial year. For the purposes of section 47 of the above 1988 Act, hereditaments where the ratepayer has refused the discount are outside of this policy and outside of the scope of the decision of which hereditaments qualify for the discount and are therefore ineligible for the relief.

3. Excluded categories

3.1

Any property wholly or mainly used for the following will not be considered to be eligible for the purposes of the Retail Discount:

  1. Hereditaments that are being used for the provision of the following services to visiting members of the public, and/or;
    • Financial services (for example, banks, building societies, cash points, bureaux de change, short-term loan providers);
    • Medical services (for example, vets, dentists, doctors, osteopaths, chiropractors);
    • Professional services (for example, solicitors, accountants, insurance agents/financial advisors);
    • Post office sorting offices;
  2. Hereditaments that are not reasonably accessible to visiting members of the public.
  3. In line with the legal restrictions in section 47(8A) of the Local Government Finance Act 1988, the Council cannot grant the discount to itself or a precepting authority.

3.2

Properties which are wholly or mainly being used for any other above uses, or uses which are considered to be broadly similar to those outlined at 3.1, will not be considered to be eligible for the Retail Discount.

3.3

The Council may exercise its discretion to refuse an application for the discount made after 31 March 2022.

4. Value of discount

4.1

The total amount of government-funded discount available for each property for 2020/21 under this expanded scheme is 100% of the bill after mandatory reliefs and, with the exception of the 2020/21 pubs discount, other discretionary reliefs funded by section 31 grants have been applied., excluding those where local authorities have used their wider discretionary relief powers introduced by the Localism Act which are not funded by section 31 grants. The 2020/21 pubs discount should be applied after the Retail Discount.

4.2

The eligibility for the discount, and the discount itself, will be assessed and calculated on a daily basis. The following formula will be used to determine the amount of relief to be granted for a chargeable day for particular hereditament in the financial year 2020-21:

Amount of relief to be granted = V, where:

V is the daily charge for the hereditament for the chargeable day after the application of any mandatory relief and any other discretionary reliefs, excluding the pubs discount and those where local authorities have used their discretionary relief powers under the Localism Act which are not funded by section 31 grants.

4.3

This will be calculated ignoring any prior year adjustments in liabilities which fall to be liable on the day.

4.4

Ratepayers that occupy more than one property will be entitled to relief for each of their eligible properties.

4.5

A new hereditament created as a result of a split or merger during the financial year, or where there is a change of use, will be considered afresh for the relief on that day. The discount will be applied on a day to day basis using the above formula.

5. Cash caps

5.1

No cash caps will apply for the period between 1 April 2021 to 30 June 2021.

5.2

Under the cash caps, a ratepayer may only receive up to the following cash caps of Expanded Retail Discount in 2021/22 ignoring any relief for the period before 1 July 2021:

  1. £2 million for ratepayers meeting the eligibility for the closed cash cap test set out in Appendix B (subject to sections 5.3 to 5.5), or
  2. £105,000 for all other ratepayers (subject to sections 5.3 to 5.5).

5.3

No ratepayer can in any circumstances exceed the £2 million cash cap across all of their hereditaments in England. Where a ratepayer eligible for the closed cash cap also occupies hereditaments which do not meet the criteria for the closed cash cap and the value of the discount on the closed hereditaments is less than £2 million then they may also claim the discount on other eligible hereditaments but only up to the cap of £105,000 in respect of those other eligible hereditaments. For example, such a ratepayer whose rate bill from 1 July 2021 onwards on hereditaments eligible for the closed cash cap is £1 million and also occupies other eligible hereditaments with a rates bill of £3 million is able to claim up to £1,105,000 in discount from 1 July 2021 onwards (£1million on their closed hereditament and then up to the £105,000 cash cap on their other eligible hereditaments).

5.4

Where a ratepayer has a qualifying connection with another ratepayer then those ratepayers should be considered as one ratepayer for the purposes of the cash caps. A ratepayer shall be treated as having a qualifying connection with another:

  1. where both ratepayers are companies, and

    i. one is a subsidiary of the other, or
    ii. both are subsidiaries of the same company; or

  2. where only one ratepayer is a company, the other ratepayer (the “second ratepayer”) has such an interest in that company as would, if the second ratepayer were a company, result in its being the holding company of the other.

5.5.

In those cases where it is clear to the Council that the ratepayer is likely to breach the cash caps then the Council will automatically withhold the discount. Otherwise, the Council may include the discount in bills and ask the ratepayers, on a self-assessment basis, to inform the Council if they are in breach of the cash caps.

6. Appeals

6.1

An appeals process will be open to all business rate payers in the City who feel that they meet the eligibility criteria of this policy and have not received a deduction from their business rates via the Retail Discount.

6.2

The following occasions are the sole basis of any grounds for appeal:

  1. The premises is of a type specifically stated as being eligible for relief, and the Council has by error omitted to grant relief;
  2. The premises is not of a type specifically stated as being eligible for relief, but by analogy the use is comparable to one which is listed as eligible.

6.3

All appeals must be made in writing by contacting the Council, using the details on your bill or the business rates website.

6.4

Appeals will be considered in line with this Policy. Decisions are taken at the sole discretion of the Director of Finance in consultation with the Revenues & Benefits Manager.

6.5

All appeals will be reviewed within four weeks of submission of all necessary information. All decisions taken on appeals are final and the outcome will be recorded and delivered to the business in writing.

6.6

If an appeal is successful, rate relief will be backdated for the full eligible period within that fiscal year. Appeals may only be made for the 2020-21 fiscal year and cannot be applied to previous years.

If an appeal is unsuccessful the only further recourse available to applicants is a judicial review. A judicial review is the means by which the decisions of billing authorities under discretionary rating powers may be questioned.

7. Policy review

7.1

The policy will be reviewed when necessary and whenever the Council receives best practice guidelines from the Ministry of Housing, Communities & Local Government, and any relevant changes to legislation.

Updated 29 April 2021

 

Appendix A: Calculation examples for 2021/2022

The Retail Discount is always calculated after mandatory relief and other discretionary reliefs funded by section 31 grant.

Example 1: An occupied shop with a rateable value of £40,000

Gross rates (before any reliefs) = £40,000 x 0. 499: = £19,960

Retail Discount (100%): = -£4,976

Retail Discount (66%): = -£9,889

Rates due (after Retail Discount): = £5,094

Example 2: An occupied shop with a rateable value of £100,000

Gross rates (before any reliefs) = £100,000 x 0.512: = £51,200

Retail Discount (100%): = -£12,765

Retail Discount (66%): = -£25,367

Rates due (after Retail Discount): = £13,068

Example 3: An occupied charity shop with a rateable value of £40,000

Gross rates (before any reliefs) = £40,000 x 0.512 = £20,480

Net rates after charity relief: = £4,096

Retail Discount (100%): = -£1,021

Retail Discount (66%): = -£2,029

Rates due (after charity relief and Retail Discount): = £1,045

Example 4: An occupied shop with a rateable value of £13,500 eligible for Small Business Rate Relief (SBRR)

Gross rates (before any reliefs) = £13,500 x 0.499 = £6,737

Net rates after SBRR (50%): = £3,368

Retail Discount (100%): = -£840

Retail Discount (66%): = -£1,669

Rates due (after SBRR and Retail Discount): = £860

Example 5: An occupied shop with a rateable value of £10,000 eligible for Small Business Rate Relief (SBRR)

Gross rates (before any reliefs) = £10,000 x 0.499 = £4,990

Net rates after SBRR (100%): = £nil

Rates bill is nil and, therefore, no Retail Discount applies

Example 6: An occupied shop with a rateable value of £40,000 eligible for Transitional Relief (TR) & receiving Revaluation Discretionary Relief

Gross rates (before any reliefs) = £40,000 x 0.499 = £19,960

Transitional Relief (say): = -£1,500

Net rates after Transitional Relief: = £18,460

Net rates after Revaluation Discretionary Relief (say): = £15,460

Retail Discount (100%): = -£3,854

Retail Discount (66%): = -£7,660

Rates due (after TR, revaluation relief and Retail Discount): = £3,946

Example 7: An occupied shop with a rateable value of £18,000 previously paying nothing prior to revaluation 2017 and eligible for

Supporting Small Business Relief (SSB)

Gross rates (before any reliefs) = £18,000 x 0.499 = £8,982

Supporting Small Businesses Relief (say): = -£5,982

Net rates after SSB: = £3,000

Retail Discount (100%): = -£748

Retail Discount (66%): = -£1,486

Rates due (after SSB and Retail Discount): = £766

Example 8: A shop with a rateable value of £40,000 (example 1) but only occupied until 30th September 2020

Gross rates (before any reliefs) = £30,000 x 0.499 = £10,007

Retail Discount (100%) = -£4,976

Retail Discount (66%) = -£3,320

Daily charge while occupied (leap year): = £1,711

Unoccupied property relief 1/10/21 to 31/12/21 (182 days): = -£5,162

Net rates while occupied: £5,050

Rates due for the year (after Retail Discount) = £6,760

Appendix B: Eligibility for the Closed Cash Cap (£2 million)

  1. Ratepayers that meet the eligibility criteria for the closed cash cap will be ratepayers who for a chargeable day occupy one or more hereditaments whose use on the chargeable day would, based on the law and guidance applicable on 5 January 2021, have meant that the business or activity would have been mandated to close by the government.
  2. For the avoidance of doubt, hereditaments which have closed due to the government’s response to coronavirus should be treated as occupied for the purposes of the closed cash cap.
  3. If, under this eligibility test, a person would have been required to close its main, in-person service but could have adapted its business to operate takeaway, click and collect or online with delivery services, it will be considered closed and be eligible for the closed cash cap because its substantive business would have been mandated to close.
  4. In cases where hereditaments would have remained open to provide services that can continue as they are exempt from the regulations (e.g. post office services, food banks) the ratepayer may still be eligible for the closed cash cap, because they would have been unable to provide their main in-person service.
  5. The following hereditaments do not meet eligibility for the closed cash cap:
    1. Hereditaments occupied by businesses and other ratepayers that would have been able to conduct their main service because they do not depend on providing direct in-person services from premises and can operate their services effectively remotely (e.g. accountants, solicitors).
    2. Hereditaments whose occupiers may have chosen to close but not been required to.