Rishi makes allowance for businesses
Business Rates made an appearance at last week’s budget with welcome news for many, still suffering from the aftermath of Covid.
With the promise of a fairer system and revaluations every three years yet to come (2023), The Chancellor handed an immediate 50% business rate relief to the retail, hospitality and leisure sectors for the coming 12 months. While this relief is capped to a maximum of £110,000, the cut is worth some £1.78bn he said. “Together with Small Business Rates Relief, this means that over 90% of all retail, hospitality and leisure businesses will see a discount of at least 50%.”
He announced that while headline business rates would remain the same, the whole package, including a new green investment relief, and the cancellation of next year’s planned increase in the business rate multiplier “...would cut business rates by £7bn.” (This is the total of all business rate cuts when combined and viewed over the next five years).
Neil Chatterton, Managing Director of Caxtons said: “The budget announcement on business rates has come as a relief, in more ways than one for our small tenants.
However, with a maximum relief up to £110,000, it means that many bigger businesses will miss out. Add to that the confirmed increase in the National Minimum Wage, supply chain issues, staff shortages and the consequences of Brexit, the benefits may be outweighed by rising costs.
“The cancellation of the usual annual increase in the ‘multiplier’ – which determines the actual rates payable on a commercial property – is a shrewd move which will go down well with business occupiers.”
Neil concluded saying “The Chancellor and the Treasury had an unenviable task with this year’s budget. Their focus, rightly, had to be on repaying an unwanted debt accrued during Covid while still keeping the country’s hopes up. On the whole, there were some positives for business and it wasn’t the total doom and gloom disaster that some had predicted.
Whilst the short-term measures will generally be welcomed, the Chancellor appeared to rule out the root and branch reform of business rates as has been demanded by many occupiers for a considerable time. He suggested that to abolish business rates altogether would be irresponsible as it is a major source of revenue. However, this somewhat misses the point as generally what has been demanded is for business rates to be replaced with a fairer form of business tax, not for it to be abolished without replacement.
The Treasury also published its review of business rates on 27th October, Budget Day.
Innovators of a small, but beautifully presented student development in the World Heritage city of Canterbury are pleased that their Queningate accommodation has been well received.
They have busted many of the hackneyed misconceptions that surround student property including: student accommodation is detrimental to an area; builders cram in as many student units as possible; builders pay no heed to local community opinions; the over-riding objective is to achieve maximum return on income at the cost of aesthetics.
Queningate Mews and Queningate Court in Havelock Street were designed and built by Paul Roberts Canterbury and Abbott Construction respectively – a well-established partnership – whose focus was on consideration of the history of the area, communicating and consulting with the Havelock Street Society, local community and local authority, and taking on board all concerns before finalising their plans.
Through a policy of positive communications, they overcame hurdles along the way and worked with all concerned to arrive at what could be an award winning blueprint for the future.
During the build, local residents were high on the priority list and everything possible was done to mitigate disruption. Direct communication links were established with neighbours and when problems arose they were soon dealt with.
One local resident said “I was apprehensive about the plan to build a student residence close to my house and in our street. I am pleased to say that we were consulted throughout the process of construction, which involved only minimal disruption. The resulting building is a pleasing addition to the street, and the occupants have given us no problems.”
Originally a brownfield site, the new builds were designed to be sympathetic to the area in and around Havelock Street and blend in with their surroundings. Consequently, great attention has been paid to finishes both inside and out, to create a sense of pride and responsibility from tenants.
The properties sit quietly and unobtrusively – a result of the build in honey coloured Flemish bond. Inside their contemporary finishes emphasise the clean lines, laminate flooring and strong colour contrast in shower rooms.
Each of the 42 one double bedroom flats are wi-fi enabled with full fibre broadband, ample USB sockets and each is fully furnished, using modern stylish touches. There is a variety of layout options, but all flats have an open plan reception room with well defined sitting, dining and kitchen areas, and all are well equipped.
Every flat has a double bed and wardrobe; a desk and chair to work from; all kitchens are fully fitted with fridge freezer, 4 ring hob, electric oven, microwave, washer dryer and dishwasher; and generous shower rooms are the norm.
The properties are a one-minute walk to Christ Church University and five-minutes from the bus station and main shopping area, restaurants, hostelries and museums in the City Centre.
Caxtons Student Lettings department is delighted to have been appointed sole agents for the properties, which are already letting well and say that single tenants or couples are welcome. Video tours can be viewed at https://www.youtube.com/watch?v=lddCaOn1EB0
Rishi Sunak’s second budget has received recognition for being generous, shrewd and pragmatic. The many pre-released and predictable initiatives were there, yet he still managed to pull some rabbits out of his hat.
There were positive announcements for businesses and house movers and the budget was welcomed by the Office for Budget Responsibility who forecast a more sustained and swifter recovery than predicted in November, with UK GDP recovering to pre-Covid levels by the middle of 2022, six months earlier than expected.
The Budget headlines that stood out for us were the variety of packages directed at the residential and property sector, and the businesses and individuals affected. In particular: an extension to Stamp Duty Land Tax (SDLT) holiday until the end of June on properties up to £500,000, then reducing to exempt properties up to £250,000 from SDLT until September, then reverting to the norm; furlough support extended until September; and next month, a new initiative to help businesses re-open delivering loans and grants to replace current schemes. Due to re-open first, non-essential retail grants of up to £6,000 per premises will be available; hospitality and leisure – including hair and beauty salons and gymns – may be restricted in their re-opening, so could claim more generous grants of up to £18,000. All of these measures will assist our clients and tenants alike.
While there was little that will directly impact Caxtons, if Covid is kept under control by vaccination, test and trace, and other precautions we have become all too used to, the measures will help some of our commercial tenants in particular, and possibly landlords who wish to expand their property portfolios.
Graham Mitchell, Caxtons FD said: “I feel that it was on the whole a good balance between continued support where needed, investment in infrastructure projects and
“The hike in corporation tax from 19% to 25% in two years’ time was hardly unexpected. It will affect the pockets of directors and investors across the country, but collectively, we all have to do our bit to start repaying the enormous Covid debt.”
On the plus side, approximately 1.4 million businesses with profits of £50,000 or less will continue to pay corporation tax at the current rate of 19%. Thereafter, there will be an escalating rate on profits up to a maximum of £250,000, resulting in only the largest companies paying the full 25%.
“A top rate of 25% would mean that the UK is (currently) still positioned below many countries in the OECD including USA, Canada, New Zealand, Japan, Germany, Australia and France. “
In order to embed his Covid recovery plans, the Chancellor also introduced additional business grants; for the retail, hospitality and leisure sectors an extension to the business rates holiday until June this year with a 66% reduction until 31st March 2022; and VAT reductions for the hospitality and tourism sectors until the end of the tax year.
Graham continued: “I also hope that high street businesses across the county will take advantage of the new £5bn grant scheme to enable non-essential businesses to re-open (up to £6,000 per premises).”
One surprise ‘rabbit’ was that any corporate investment in plant and machinery made during the next two years will attract a reduction in tax liability equivalent to 130%. So, speculate to accumulate was definitely the message.
The Chancellor confirmed there will be eight new
freeports across England with one on our doorstep in the Thames Estuary.
As well as by means of the new Corporation Tax rates, the Treasury will claw back tax by holding personal allowances at £12,570 and the higher rate threshold at £50,270 until 2026 – so any pay increases during that time will all be subject to tax.
There were no changes to income tax, national insurance or VAT rates.
“We hope that this budget will bring more certainty, more positivity, enabling our clients to plan for the future and our tenants to experience restored job security. This is a budget designed to open the door to Covid recovery – a long way off, but a beginning. We shouldn’t be under any illusions that it will be easy or quick, but hopefully it will be successful in the long-run.”
If you would like to know more about how the 2021 Budget may impact your property needs please contact us on 01474 537733.