The business rates holiday aimed at high street businesses forced to close during the pandemic has been extended for another three months, with big supermarkets heading off any criticism by promising to shun the new £3bn tax break.
The year-long business rates holiday, which was due to finish in England at the end of this month, has been extended by the government until 30 June. After that only businesses forced to shut this year would be eligible for a big reduction in their bills for the commercial equivalent of council tax. The relief is being capped at £2m, which will be a blow for non-essential retailers and pub companies with large property estates.
Last year Tesco, Sainsbury’s, Asda and Morrisons were among the big names who committed to repaying £2.2bn of the emergency taxpayer support. They were heavily criticised for accepting business rates relief while simultaneously paying big dividends to shareholders after their stores stayed open.
The rates relief was a blunt instrument deployed by the chancellor, Rishi Sunak, to prop up retailers barred from trading during the first lockdown. The rates holiday has already been extended for a full year in Scotland, with Wales yet to set out its plans. The government said businesses in England could “choose to opt out of the relief”.
The real estate adviser Altus Group put the cost of the three-month extension at £3bn. The lifeline would save hard-hit pubs, restaurants and hotels more than £600m but that would be less than the £760m of relief essential retailers such as supermarkets and DIY stores are entitled to.
Tesco, one of the biggest payers of business rates, said that when it returned £585m of rates relief for 2020 it had done so because it “was the right thing to do”. “Those same reasons still stand today and so we will not take advantage of the relief,” it added. Sainsbury’s, Asda and Morrisons said they would do the same.