EU rules could ‘thwart’ Hammond’s business rates promise

Hammond’s plan to help high streets through a near £1bn, two year business rates cut, is set to be thwarted by European Union state aid rules, real estate agents Altus Group have claimed. The chancellor will slash business rates next April by discounting bills by a third for those retail occupied properties with a rateable value of less than £51,000 for 2019/20 and 2020/21 until the next revaluation comes into effect in April 2021. Hammond’s plan equates to a tax cut of around £450m in each of these years and the chancellor says this will provide an annual saving of up to £8,000 for each property eligible. However, the discount will be subject to EU rules which restrict state aid to €200,000 (£174,265) per business over a three year period. Altus Group said this meant shops, pubs and restaurants that were part of large chains would likely miss out. Robert Hayton, head of UK business rates at real estate advisor Altus Group, analysed over 6,700 retail sites in England and Wales occupied by large shop, pub and restaurant chains. Hayton said of the retail sites operated by large chains that he analysed, over one in five, 1,487 out of the 6,728 in total, had a rateable value of less than £51,000 and were eligible to the new retail relief announced at the budget. He added that “most large chains will reach the de minimis regulation limit pretty quickly one way or another and will be precluded.” Hayton cited the £1,000 discount which was handed to pubs with a rateable value of less than £100,000 during the first two financial years after the revaluation and said: “Whilst nearly 25,000 pubs met the criteria for that discount, less than 18,000 actually received it”. While the UK officially exits the European Union on 29 March 2019, before the start of the next financial year, after the transition period, the UK has proposed to maintain a "common rulebook" on state aid that would "mirror" the EU's current legal regime and would apply throughout the UK and across all sectors of the economy. Retail Sites Analysed Sites Under £51,000* Claires Accessories 156 118 Next PLC 212 12 Marks and Spencers P.L.C. 110 9 New Look Retailers Ltd 361 106 WH Smith 695 285 Thorntons PLC 142 101 Arcadia 376 109 Total Analysed 2052 740 Pubs Sites Analysed Sites Under £51,000* Greene King PLC 812 144 JD Wetherspoon PLC 784 86 Mitchell & Butlers Retail Ltd 1168 72 Fuller Smith & Turner Plc 146 30 Stonegate Pub Company 425 99 Total Analysed 3335 431 Restaurants Sites Analysed Sites Under £51,000* Nandos 148 26 Pizza Hut (UK) Ltd 226 26 Wagamama Ltd 112 10 Pizza Express (Restaurants) Ltd 331 154 Prezzo PLC 238 77 Five Guys Ltd 63 8 Pret a Manger Ltd 223 15 Total Analysed 1341 316