Coronavirus

UKH warns business rates cap may endanger mid-sized firms

UKH chief executive Kate Nicholls has said the cap means some firms could be facing a business rates bill in July

UKHospitality has warned that the £2m cap the government has imposed on business rates relief “could threaten the survival of jobs and businesses” for many mid-sized firms.

The warning comes after the cap was unveiled as part of the chancellor’s budget announcement on Wednesday (3 March). As part of the £65bn package, the chancellor revealed the current business rates holiday is to be extended until June, before being discounted for nine months by two thirds or up to a cap of £2m.

However, UKH chief executive Kate Nicholls has said the cap means some firms could be facing a business rates bill in July, just a few weeks after the Government’s scheduled relaxing of all social distancing restrictions.

She said: “Government must now look urgently at the arbitrary £2 million cap imposed on business rates relief in Wednesday’s Budget. This will see many mid-sized businesses facing full rates bills in July, just days after reopening.

“This limit on support for hard-pressed hospitality businesses is deeply damaging and could threaten the survival of jobs and businesses in the sector, as mid-sized companies are forced to prioritise paying tax over paying wages. We urge the Government to take the same pragmatic and sensible approach to rates relief as with subsidies and review their approach on business rates support.”

While critical of the rates cap, Nicholls did express her gratitude towards the increase in state aid the budget provided for the sector.

She added: “The increase in the value of subsidies permitted to businesses is a positive move by Government and will allow more businesses to access the grants that they so desperately need. While this cut-off means that some businesses will continue to miss out on parts of the funding that Government has announced, it is a big step forward and provides certainty for business.

“This increase must be communicated to local authorities urgently to ensure that funds are paid out. Government could go further and explore uncapped grants in respect to Covid-19 in line with EU subsidy rules.”

She concluded: “The Business Secretary has rightly recognised that these companies are significant employers and that 230,000 people’s jobs were potentially at risk if this emergency funding has not been provided.”

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