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Pressure grows on Rishi Sunak as Scotland proposes year-long rates holiday

16 February 2021 by
Pressure grows on Rishi Sunak as Scotland proposes year-long rates holiday

Hospitality and leisure businesses in Scotland will pay no business rates for 2021-2022 under proposals outlined by the Scottish government.

Finance secretary Kate Forbes (pictured) announced the plans following confirmation of a further £1.1b coronavirus support funding for Scotland from the UK government.

The move builds on the three-month rate relief extensionannounced in the Scottish Budget last month.

It will be taken forward provided the Scottish government receives an assumed £500m funding from the UK Budget on 3 March, and that requisite funds are available to maintain existing support into 2021-2022.

Forbes said: "When I presented the Budget last month I made clear that if resources allowed I would extend 100% non-domestic rates relief for properties in the retail, hospitality, leisure and aviation sectors for all of 2021-2022.

"I am now in a position to provide that certainty to business, meeting the number one ask of the business community and demonstrating our commitment to supporting the economy. To ensure the resources are targeted at those who need it most, we are working with councils to ensure the application process will be live ahead of bills being issued."

Pressure is growing on chancellor Rishi Sunak to commit to a similar relief extension in England beyond the current end date of 31 March.

According to real estate advisory firm Altus Group, the 2020-2021 rates holiday exempted 358,264 hospitality, retail and leisure properties in England from payment, saving them a £10.13b bill.

A number of major retailers, including Tesco and Asda, have voluntarily handed back savings made via the relief to government.

Robert Hayton, UK president of property tax at Altus Group, wanted that ending the holiday too early for hard-hit businesses such as hospitality risks "affecting the recovery from the pandemic now the end is in sight".

He added: "The chancellor must use his upcoming Budget to ensure that viable businesses in England are adequately supported through a discerning targeted extension."

The Scottish Licensed Trade Association (SLTA) welcomed the decision and said the announcement was a "weight off our collective shoulders". SLTA spokesman Paul Waterson said: "Extending 100% rates relief for the next financial year gives pubs, hospitality and tourism a fighting chance when we do re-emerge from lockdown.

"However, what we need now is for UK chancellor Rishi Sunak, in his Budget on 3 March, to keep VAT at 5% and also extend current furlough arrangements. While rates are generally the biggest fixed rate costs for the hospitality industry, we look forward to further concessions that will help businesses."

Waterson also said that it was imperative that businesses had a clear route map for the easing of lockdown restrictions. "We look forward to hearing first minister Nicola Sturgeon's plans for getting out of lockdown and, crucially, some dates – even if they are provisional.

"The news that there is to be a £50m package of support for Scotland's town centres and more capital funding specifically for tourism infrastructure projects in local communities is also very good news."

UKHospitality Scotland executive director Willie Macleod said the move would provide "continued support for hard-pressed businesses and give them breathing room to plan ahead with some more certainty".

He said: "Our recovery will be enhanced immeasurably if the UK government extends the VAT cut for hospitality, giving businesses an even better chance of survival. It will give many employers vital support to keep jobs open and put them in a much stronger position to help lead the economic recovery of Scotland this year."

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