Agenda item

Report attached.

Members considered a report ofCouncillor Vanessa Alexander, Portfolio Holder for Resources and Council Operations, presenting an amendment to the Retail, Hospitality and Leisure Non Domestic Rate Relief Scheme for the period 1^st April 2025 to 31^st March 2026 providing eligible businesses with a 40% rate relief on their business rates liability for this period.

Councillor Alexander provided a brief introduction to the report.

Councillor Cassidy enquired about the level of discount under the existing Scheme (2024-2025).  Councillor Alexander responded that the current rate of relief was 75%.

Approval of the report was not deemed a key decision.

Reasons for Decision

At the Autumn Budget on 30 October 2024, the Chancellor had announced the extension of the business rates relief scheme for retail, hospitality and leisure properties, retaining the existing eligibility criteria but reducing the level of relief to 40%, up to a cap of £110,000 per business.  This would support the businesses that made the nation’s high streets and town centres a success and help them evolve and adapt to changing customer demands.

Government had supported billing authorities and their preceptors by funding, in full, the discretionary reliefs awarded under these measures using grants delivered under Section 31 of the Local Government Act 2003.

The administration of the discount scheme within this report was subject to restrictions laid out in Section 47 of the Local Government Finance Act 1988 which stipulated that any variation or termination of a discount scheme under Section 47 that would result in an increased financial liability for the ratepayer must be done at the end of a financial year and with 12 months’ notice.  By implementing this new scheme from 1^st April 2025, the Council’s administration of business rates relief remained within its discretionary powers.

Retail, Hospitality and Leisure Relief Scheme 2025/2026

Since 2019/20 the Government had provided a Business Rates Retail Discount for retail properties, which for 2020/21 it had expanded to include the leisure and hospitality sectors.  On 30^th October 2024, the Government had confirmed an extension of the Retail, Hospitality and Leisure Relief to apply in 2025/2026, but reducing the level of relief to 40%.

For 2025/2026, the Retail, Hospitality and Leisure Relief would apply after mandatory reliefs and other discretionary reliefs funded by grants made under section 31 of the Local Government Act 2003 had been applied.  Other locally applied discounts under section 47 of the Local Government Finance Act 1988 would have to be applied after the Retail, Hospitality and Leisure relief.

Retail, Hospitality and Leisure Relief awards were made under section 47 of the Local Government Finance Act 1988 as amended.

For the 2025/2026 scheme, the Council had identified approximately 200 businesses that were considered to meet the relevant eligibility criteria from 1^st April 2024 to 31th March 2025 with an estimated total of £525,000 in business rates relief to be awarded.  As a pro-active measure, and in line with Ministry of Housing, Communities and Local Government (MHCLG) guidance, the Council intended to apply the Retail, Hospitality and Leisure Relief for these businesses automatically as part of the annual billing process for 2025/2026.

For the 2025/2026 scheme, awards of Retail, Hospitality and Leisure Relief were capped at £110,000 per business.  In light of this, the Council would request applications to be made for Retail, Hospitality and Leisure Relief from businesses that were part of a national chains, or a subsidiary of another business.

For the 2025/2026 scheme, ratepayers would be given the right to refuse the discount.

Cash Caps

For the Retail, Hospitality and Leisure Relief 2025/2026, no ratepayer could in any circumstances exceed the £110,000 cash cap across all of their hereditaments in England.

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

a.   Where both ratepayers were companies, and

i.       One was a subsidiary of the other, or

ii.      Both were subsidiaries of the same company, or

b.   Where only one ratepayer was a company, the other ratepayer (the “second ratepayer”) had such an interest in that company as would, if the second ratepayer where a company, result in it being the holding company of the other.

State Aid/Subsidy Control

Retail, Hospitality and Leisure Relief was likely to amount to subsidy.  Any relief provided by local authorities under this scheme would need to comply with the UK’s domestic and international subsidy control obligations, and, in particular, the Subsidy Control Act 2022 (the “SCA)”.  If the relief proposed in the Scheme fell within the rules relating to Minimal Financial Assistance (“MFA”), the subsidy could be paid lawfully by the Council without the need to carry out an assessment of compliance with the subsidy control principles.

The SCA rules relating to MFA enabled “an enterprise” to receive subsidy up to £315,000 over a period of 3 years, which for this purpose would include 2025/26 and the two previous financial years.  A holding company and its subsidiaries would be treated as one enterprise for the purpose of the MFA calculation.  The former Department for Business, Energy & Industrial Strategy (BEIS) COVID-19 business grants and any other subsidies claimed under the Small Amounts of Financial Assistance limit of the Trade and Cooperation Agreement should be counted towards the £315,000 MFA limit.

In those cases where it was clear to the Council that the ratepayer was likely to breach the cash cap or the MFA limit then the Council would automatically withhold the relief.  Otherwise, the Council might include the relief in bills and ask the ratepayers, on a self-assessment basis, to inform the Council if they were in breach of the cash caps or MFA limit.

Alternative Options Considered and Reasons for Rejection

The scheme outlined in the report was provided to local ratepayers at no additional cost to the Council as discounts provided under the schemes were subsidised by Government.  Written and published guidance allowed for a consistent and fair application of the discount schemes.

The Council might extend the Retail, Hospitality and Leisure Relief Scheme for each applicable time period to include more business types, however any expansion would be at additional cost to the authority and all business types were already covered within the Council’s broader discretionary powers via application and consideration on a case by case basis.  A further expansion of the scheme was therefore considered not to be required and was not recommended.

Resolved                                    -    That the Retail, Hospitality and Leisure Non Domestic Rate Relief Scheme 2025/2026 attached to the report as Appendix 1, is approved and applied to business rates bills as soon as is reasonably practicable in order to provide businesses with certainty around their business rates liabilities for 2025/2026.