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Retail, hospitality and leisure business rates relief scheme

Retail, hospitality and leisure business rates relief scheme 2022-2023.

Contents

  1. Introduction
  2. Eligibility
  3. Excluded categories
  4. Value of discount
  5. Cash caps
  6. Recalculations of Relief
  7. Appeals

1. Introduction

1.1

Leicester City Council (‘the Council’) is directed by government to provide a Retail, Hospitality and Leisure Business Rates Relief Scheme (‘the Scheme’).

1.2

On 27 October 2021 the government confirmed that the Scheme would apply in 2022/23 to provide eligible, occupied, retail, hospitality and leisure properties with a 50% relief, up to a cash cap limit of £110,000 per business.

1.3

The Scheme will be available from 1 April 2022 and will be applicable to the financial year 2022/23 only.

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 Scheme, 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 & 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, supermarkets, etc).
    • 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, tanning shops, etc).
    • Shoe repairs/key cutting
    • Travel agents
    • Ticket offices e.g. for theatre
    • Dry cleaners
    • Launderettes
    • PC/TV/domestic appliance repair
    • Funeral directors
    • Photo processing
    • Tool hire
    • Car hire
  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 (e.g. 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 (e.g. 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 2023 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:
    • Financial services (e.g., banks, building societies, cash points, bureaux de change, short-term loan providers, betting shops)
    • Medical services (e.g. vets, dentists, doctors, osteopaths, chiropractors)
    • Professional services (e.g., solicitors, accountants, insurance agents/financial advisors, employment agencies, estate agents, letting agents)
    • 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 of the 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.

 

4. Value of discount

4.1

Subject to the cash caps outlined in section 5, the total amount of government-funded discount available for each property for 2022/23, under this scheme for chargeable days from 1 April 2022 to 31 March 2023, is 50% of the chargeable amount after mandatory reliefs and other discretionary reliefs funded by section 31 grants have been applied, but before those where the Council has used its wider discretionary relief powers introduced by the Localism Act which are not funded by section 31 grants.

4.2

Additionally, the former categories of discretionary relief available prior to the Localism Act 2011 (i.e., charitable/CASC/rural etc. top up and not for profit) should be applied first in the sequence of discretionary reliefs and, therefore, before the scheme.

4.3

Authorities may use their discretionary powers to offer further discounts outside this scheme or additional relief to hereditaments within the scheme. However, where an authority applies a locally funded relief under section 47, this should be applied after the scheme.

4.4

Subject to the cash caps outlined in section 5, 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 a particular hereditament in the financial year 2022/23:

Amount of relief to be granted = V x 0.5, where:                       

V is the daily charge for the hereditament for the chargeable day after the application of any mandatory relief and any other certain discretionary reliefs outlined in 4.1 above.

4.5

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

4.6

Ratepayers that occupy more than one property will be entitled to relief for each of their eligible properties subject to the cash caps explained in section 5.

5. Cash caps

5.1

No ratepayer can in any circumstances exceed the £110,000 cash cap across all of their hereditaments in England.

5.2

Where a ratepayer has a qualifying connection with another ratepayer in England 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
    1. one is a subsidiary of the other, or
    2. 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.

5.3

To the extent that the Council is seeking to provide relief that falls within the Small Amounts of Financial Assistance Allowance, Article 364 of the UK-EU Trade and Cooperation Agreement (TCA) allows an economic actor (e.g., a holding company and its subsidiaries) to receive up to £325,000 Special Drawing Rights (£343,000 as at 9 December 2021) in a three-year period (consisting of the 2022/23 year and the two previous financial years). Expanded Retail Discount granted in either 2020/21 or 2021/22 does not count towards the £343,000 allowance but business grants (throughout the 3 years) and any other subsidies claimed under the Small Amounts of Financial Assistance limit should be counted.

5.4

In those cases where it is clear to the Council that the ratepayer is likely to breach the cash cap or the Small Amounts of Financial Assistance limit 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 or Small Amounts of Financial Assistance limit.

5.5.

Any relief provided by the Council under the scheme will need to comply with the UK’s domestic and international subsidy control obligations.[1]

See the BEIS guidance for public authorities which explains the subsidies chapter of the UK-EU Trade and Cooperation Agreement (TCA), World Trade Organisation rules on subsidies, and other international subsidy control commitments).

6. Recalculations of Relief

6.1

The amount of relief awarded will be recalculated in the event of a change of circumstances. This could include, for example, a backdated change to the rateable value or the hereditament. This change of circumstances could arise during the year in question or during a later year.

6.2

Under regulations made under section 47 of the Local Government Finance Act 1988 the Council must give at least 12 months’ notice of a revocation or variation of a rate relief scheme the effect of which would be to increase rate bills. Such a revocation or variation can only take effect at the end of a financial year (other than to comply with international agreements). But within these regulations, the Council may still make decisions which are conditional upon eligibility criteria. If a change in circumstances renders a property ineligible, the relevant bill can be amended in the year to reflect the loss of the relief.

7. Appeals

7.1

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.

7.2

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; or
  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

7.3

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

7.4

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.

7.5

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.

7.6

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 2022-23 fiscal year and cannot be applied to previous years. An appeal must be made by 30 September 2023.

7.7

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.

8. Policy Review

8.1

The policy will be reviewed when necessary and whenever the Council receives best practice guidelines from the Department for Levelling Up, Housing and Communities, and any relevant changes to legislation.

Updated 27 January 2022

Appendix A: Calculation examples for 2022/2023

The Retail, Hospitality and Leisure scheme is always calculated after mandatory relief and other discretionary reliefs funded by section 31 grant. Ignoring cash caps.

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

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

RHL Relief Discount (50%), £19,960 x 0.5: = =-£9,890

Rates due (after RHL Relief Discount): = £9,980

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

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

RHL Relief Discount (50%), £51,200 x 0.5 = -£25,600

Rates due (after RHL Relief Discount): = £25,600

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 (80%): = £4,096 

RHL Relief Discount (50%), £4,096 x 0.5 =-£2,048

Rates due (after charity relief and RHL Relief Discount): = £2,048

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 

RHL Relief Discount (50%), £3,368 x 0.5 = -£1,684

Rates due (after SBRR and RHL Relief Discount): = -£1,684

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 RHL Relief Discount applies

Example 6: An occupied shop with a rateable value of £40,000 but only occupied until 30 September 2022

Gross rates while occupied (before any reliefs) = £40,000 x 0.499 x 183/365 = £10,007 

RHL Relief Discount (50% from 01/04/22 to 30/09/22), £10,007 x 0.5 =-£5,004

Net rates while occupied: = £5,004

Gross rates while unoccupied (before any reliefs) = £40,000 x 0.499 x 183/365 = £10.007

Unoccupied property relief (100% from 01/10/22 to 31/12/22), £10,212 x 92/182: = -£5,162

Net rates while unoccupied: = -£5,050

Rates due for the year (after empty property relief and RHL Relief Discount): = £10,054