This Insight is about the March 2021 Budget. View the Insight on business rate reliefs in the October 2021 Budget.

To support businesses during the Covid-19 pandemic, a further round of business rate reliefs and cash grants for businesses in England was announced in the March 2021 Budget.

Additional rate relief, and cash grants for businesses, have been available through 2020/21, and similar schemes will run for businesses in England in the 2021/22 financial year. Scotland, Wales and Northern Ireland have programmes run by the devolved administrations.

This Insight explains what the Budget said about support for businesses in the coming financial year. It covers the extension of 100% business rate relief into 2021/22 for certain sectors of the economy, plus a new programme of cash grants for businesses.

What Covid-19 related support for businesses will be available in 2021/22?

For the first three months of the 2021/22 financial year (April to June), there will be 100% business rate relief for properties in the retail, hospitality and leisure sectors. This extends the 100% relief available throughout 2020/21. From July 2021, those properties will get 66% relief until March 2022.

Children’s nurseries will also  get 100% business rate relief from April to June 2021, followed by 66% relief until March 2022. As in 2020/21, the relief will be available for properties occupied by providers on Ofsted’s Early Years Register.

Cash cap

The Government has set a cash cap on the total business rate relief available to businesses in England. This is £2 million per business, if the properties were required to close from 5 January 2021, and £105,000 per business for other eligible property, including nurseries (see page 49 of the Budget document). These caps come into play only after the first three months of the 2021/22 financial year.

The Government published guidance on business rate relief on 4 March. The classes of property that are eligible and ineligible are identical to those in the 2020/21 financial year.

Due to the initial 100% relief, the guidance asks billing authorities to issue instalment schemes for rate-payers that cover months four to twelve only.

Restart Grants

The 2021 Budget included a new programme of Restart Grants to support businesses in the 2021/22 financial year.

Grants will be available to retail businesses (strand one – which will reopen sooner), and to businesses in the hospitality and leisure sectors, together with gyms, accommodation premises, and personal care premises (strand two).

These grants are similar to previous grant schemes, like the Local Restrictions Support Grants

(LRSG) and the Closed Businesses Lockdown Payment. They will be available in respect of each property occupied by a business, and the grant sums available will be dependent on each property’s rateable value (RV). The amounts that will be made available are shown in the table below.

Restart Grants Non-essential retail Hospitality, leisure etc
Amount per property available to councils: £15k RV or under £2,667 £8,000
Amount per property available to councils:  £15,001-£50,999 RV £4,000 £12,000
Amount per property available to councils:  £51,000 + RV £6,000 £18,000

The Restart Grants available to retail properties are two-thirds of the Closed Businesses Lockdown Payment, and those available to the hospitality, leisure and related sectors are double the Closed Businesses Lockdown Payment.

The Government guidance defines ‘non-essential retail’, and hospitality, leisure, gym services, accommodation, and personal care businesses, including exclusions. As with the LRSG, businesses not within the business rates system won’t be eligible for the Restart Grant.

Decisions on who is eligible for these grants sits with the billing authority (the district or unitary council).

New guidance on the Local Restrictions Support Grant

At Budget 2021, new guidance was published on the Local Restrictions Support Grant. This clarified how the LRSG will work until the end of the 2020/21 financial year. A one-off ‘Closed Businesses Lockdown Payment’ was also made available to businesses required to close from 5 January onwards (see Government guidance published on 21 January 2021

).

The sums available from these grant schemes are in the table below.

LRSG: 5 Nov – 2 Dec 2020 (28 days) Closed Businesses Lockdown Payment LRSG: 5 Jan – 15 Feb 2021 (42 days) LRSG: 16 Feb – 31 Mar 2021 (44 days)
Amount per property available to councils: £15k RV or under £1,334 £4,000 £2,001 £2,096
Amount per property available to councils:  £15,001-£50,999 RV £2,000 £6,000 £3,000 £3,143
Amount per property available to councils:  £51,000 + RV £3,000 £9,000 £4,500 £4,714

The total sums available to businesses via grants after 4 March 2021 will be subject to a number of ‘subsidy allowances’, which replace the European Union’s state aid provisions and limit the amount each business can receive. These allowances are:

  • The Small Amounts of Financial Assistance Allowance – you’re allowed up to £335,000 (subject to exchange rates) over any period of three years
  • The Covid-19 Business Grant Allowance – you’re allowed up to £1.6 million
  • The Covid-19 Business Grant Special Allowance – if you have reached your limits under the two grants above, you may be able to access a further allowance of up to £9 million, if certain conditions are met
  • Grants under these three allowances can be combined for a potential total allowance of up to £10.9 million (subject to exchange rates).

Further reading

New business grant schemes explained, House of Commons Library

About the author: Mark Sandford is a researcher at the House of Commons Library, specialising in local government and devolution in England.

Photo by Dan Burton on Unsplash