Tens of thousands of England’s retail, leisure and hospitality firms will not pay any business rates in the coming year, the chancellor has announced.
Companies with a rateable value of less than £51,000 will be eligible for the tax holiday, Rishi Sunak said.
The measure applies to firms including shops, cinemas, restaurants and hotels.
It is part of a package of “extraordinary” measures to support the UK economy in the face of disruption from the coronavirus outbreak.
“That is a tax cut worth over £1bn, saving each business up to £25,000,” Mr Sunak said.
Business rates are a tax on properties that are used for commercial purposes, and are charged based on an estimate of what it would cost to rent the property on the open market: the “rateable value”.
Mr Sunak described the business rates holiday as an “exceptional step” that would benefit museums, art galleries, theatres, caravan parks, gyms, small hotels, sports clubs and night clubs, all of whom will be hard hit if customers stay away to slow the spread of coronavirus.
Businesses have been calling for a review of business rates for several years, arguing they make it hard for bricks and mortar retailers to compete with online rivals.
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The chancellor said business rates as a whole would be reviewed later in the year.
The head of retail and consumer at Pinsent Masons, Tom Leman, said the announcement would be “extremely welcome news” for small businesses.
“On the basis the coronavirus is not a long-term issue for these businesses, it is crucial that they have the liquidity to see them through the worst.
“This will definitely help the cause and hopefully see many of them come out the other side ready to benefit from the increased spending power prompted by the money people are currently saving on their discretionary spend.”