Thousands of high street firms miss out on £55m funding due to ‘anomaly’
More than 3,650 small shops, pubs and restaurants are each set to lose out on £15,000 of Government grant funding due to an “anomaly”, according to real estate experts.
Councils have been provided with billions of pounds of cash to offer hospitality and retail businesses grants of up to £25,000 to help mitigate the impact of coronavirus.
Businesses with a rateable value of more than £15,000 will be eligible for the full £25,000 grant.
Meanwhile, firms with a value of £15,000 or less will only be eligible for £10,000 grants.
The Government introduced the threshold as companies valued below £15,000 had previously been eligible for small business rates relief.
However, this relief was tapered between £12,001 and £15,000, meaning that firms with a rateable value of £12,001 would have their rates reduced by 100%, with the size of the cut reducing until those with a £15,000 valuation receive a 0% cut.
Experts at real estate advisory firm Altus Group said this means that there are thousands of companies with a valuation of exactly £15,000, which have previously received no small business rates relief, but will now be ineligible for the £25,000 grants.
It said Government figures reveal 3,657 high street business will only be able to receive £10,000 grants despite not receiving the previous benefit of small business rates relief.
If these firms were to have their valuations just one pound higher, they would be able to receive a further £15,000 each, totalling £55 million for all firms, Altus said.
Robert Hayton, head of UK business rates at real estate adviser Altus Group, said: “This is an anomaly and obvious unfairness in the design of the grant funding scheme.
“It is particularly harsh on those businesses occupying a property with a rateable value of exactly £15,000.
“With thresholds there will always be winners and losers and these are found at the upper end too.”
Nevertheless, all high street firms have had their business rates payments waived for the current financial year as part of the Treasury’s package to support firms in the face of the coronavirus pandemic.
A Treasury spokesman said: “The Chancellor has outlined an unprecedented package of measures to protect millions of people’s jobs and incomes as part of the national effort in response to coronavirus.
“That means retail, hospitality and leisure businesses will pay no business rates in 2020-21 and will receive grants on top of that to help them cover their bills.
“In addition to that the Government is providing cash grants to businesses to pay 80% of the cost of staff wages, up to a maximum of £2,500.
“It also includes an enhanced Time to Pay offer to fit the specific impacts of Covid-19 to allow all individuals and businesses more time to pay tax bills.”