Retail, Hospitality and Leisure Relief - Cash caps

The Government guidance on Retail, Hospitality and Leisure Relief for 2021/22 advises the following:

1. No cash caps will apply for the period between 1 April 2021 to 30 June 2021
2. Under the cash caps, a ratepayer may only receive up to the following cash caps of Expanded Retail Discount in 2021-22 ignoring any relief for the period before 1 July 2021:

1. £2m for ratepayers meeting the eligibility for the closed cash cap set out below (subject to points 3 to 4 below)
2. £105,000 for all other ratepayers (subject to points 3 to 4 below)
3. No ratepayer can in any circumstances exceed the £2m cash cap across all of their hereditaments (i.e. business properties) in England.  Where a ratepayer eligible for the closed cash cap also occupies hereditaments which do not meet the criteria for the closed cash cap and the value of the discount on the closed hereditaments is less than £2m then they may also claim the discount on other eligible hereditaments but only up to the cap of £105,000 in respect of those other eligible hereditaments.  For example, such a ratepayer whose rate bill from 1 July 2021 onwards on hereditaments eligible for the closed cash cap is £1m and also occupies other eligible hereditaments with a rates bill of £3m is able to claim up to £1,105,000 in discount from 1 July 2021 onwards (£1m on their closed hereditament and then up to the £105,000 cash cap on their other eligible hereditaments)
4. Where a ratepayer has a qualifying connection with another ratepayer then those ratepayers should be considered as one ratepayer for the purposes of the cash caps.  A ratepayer shall be treated as having a qualifying connection with another:
   1. Where both ratepayers are companies, and
      1. One is a subsidiary of the other, or
      2. Both are subsidiaries of the same company; or
      3. Where only one ratepayer is a company, the other ratepayer (the ‘second ratepayer’) has such an interest in that company as would, if the second ratepayer were a company, result in it being the holding company of the other

Eligibility for the Closed Cash Cap (£2million)

• Ratepayers that meet the eligibility criteria for the Closed Cash Cap will be ratepayers who for a chargeable day occupy one or more hereditaments whose use on the chargeable day would, based on the law of guidance applicable on 5 January 2021 have meant that the business or activity would have been mandated to close by the government
  • For the avoidance of doubt, hereditaments which have closed due to the government’s response to Coronavirus should be treated as occupied for the purposes of the Closed Cash Cap
  • If, under this eligibility test, a person would have been required to close its main, in-person service but could have adapted its business to operate takeaway, click and collect or online with delivery services, it will be considered closed and be eligible for the Closed Cash Cap because its substantive business would have been mandated to close
  • In cases where hereditaments would have remained open to provide services that can continue as they are exempt from the regulations (e.g. post office services, food banks) the ratepayer may still be eligible for the Closed Cash Cap, because they would have been unable to provide their main in-person service
  • The following hereditaments do not meet eligibility for the Closed Cash Cap:
  1. Hereditaments occupied by businesses and other ratepayers that would have been able to conduct their main services because they do not depend on providing direct in-person services from the premises and can operate their services effectively remotely (e.g. accountants, solicitors)
  2. Hereditaments whose occupiers may have chosen to close but not been required to

  The Government guidance on Retail, Hospitality and Leisure Relief for 2022/23 advises the following:

  1. Under the cash cap, no ratepayer can in any circumstances exceed the £110,000 cash cap across all of their hereditaments in England.
  2. Where a ratepayer has a qualifying connection with another ratepayer then those ratepayers should be considered as one ratepayer for the purposes of the cash caps. A ratepayer shall be treated as having a qualifying connection with another:
     
     a. where both ratepayers are companies, and
          i. one is a subsidiary of the other, or
          ii. both are subsidiaries of the same company; or
     b. where only one ratepayer is a company, the other ratepayer (the “second ratepayer”) has such an interest in that company as would, if the second ratepayer were a company, result in its being the holding company of the other.
      
  3. Furthermore, the Retail Hospitality and Leisure Scheme is likely to amount to subsidy. Any relief provided by local authorities under this scheme will need to comply with the UK’s domestic and international subsidy control obligations (See the BEIS guidance for public authorities which explains the subsidies chapter of the UK-EU Trade and Cooperation Agreement (TCA), World Trade Organisation rules on subsidies, and other international subsidy control commitments).
  4. To the extent that a local authority is seeking to provide relief that falls within the Small Amounts of Financial Assistance Allowance, Article 364 of the TCA allows an economic actor (e.g. a holding company and its subsidiaries) to receive up to 325,000 Special Drawing Rights (£343,000 as at 9 December 2021) in a three-year period (consisting of the 2022/23 year and the two previous financial years). Expanded Retail Discount granted in either 2020/21 or 2021/22 does not count towards the £343,000 allowance but BEIS business grants (throughout the 3 years) and any other subsidies claimed under the Small Amounts of Financial Assistance limit should be counted.
  5.  In those cases where it is clear to the local authority that the ratepayer is likely to breach the cash cap or the Small Amounts of Financial Assistance limit then the authority should automatically withhold the relief. Otherwise, local authorities may include the relief in bills and ask the ratepayers, on a self-assessment basis, to inform the authority if they are in breach of the cash caps or Small Amounts of Financial Assistance limit. Part 4 of this guidance contains a sample ratepayer declaration, which local authorities may wish to use to discharge this responsibility.

  It will be your responsibility to inform the council on a self-assessment basis if you are not eligible for the relief due to the cash cap