LAs lose 50 per cent of business rates income through Covid

Local authorities’ business rates’ income dropped dramatically by almost 50% in the last financial year, revealed in government data published this week.

According to the annual stats released by the Department for Levelling Up, Housing and Communities, local authorities reported that non-domestic rates income for 2020-21 was £12.8bn, compared to £25.3bn in 2019-2020.

The DLUHC report acknowledged: “This is significantly lower than usual, due to the expanded retail discount relief of £11.1 billion which was introduced in response to the coronavirus pandemic.”

These are the total amounts collected that included all reliefs, accounting adjustments and sums retained outside the rates retention schemes.

Not surprisingly, figures also indicated that the amount of relief granted by LA’s more than tripled in the past year, when many businesses were eligible for Covid-19 related reliefs. The figure rose from £5.1bn in 2019-20 to £16bn in 2020-21.

Included in this, £4.7bn was mandatory relief with £2.1bn of small business rates relief making up the full figures. £11.3bn was discretionary relief, of which £11.1bn was the expanded retail discount relief offered by the Government in response to Covid.

In 2020-2021 the government offered a lifeline to certain sectors with 100% business rates relief for hospitality, retail, and leisure businesses. This was granted via local authorities and funded through Section 31 grants.

Charities were also substantial beneficiaries with total relief granted in this sector amounting to £2.1bn in the same time period. Reliefs granted to empty premises came to £1.1bn. Local authorities granted £2.1 billion relief under the Small Business Rate relief scheme for 2020-21 but they saw a net increase in appeals provision of £983m, with councils putting more than £1.6bn additional aside for this purpose.

Non-domestic rates, or business rates, are collected by billing authorities and are the way in which those that occupy a non-domestic property (or hereditament) contribute towards local services. The introduction of the business rates retention scheme in 2013-14 allows local authorities to retain a proportion of the revenue that is generated in their area.