How will COVID-19 affect my business rates and commercial premises insurance?

Do you have a commercial premises? If so, the coronavirus pandemic may have affected your business rates and insurance policy.

Do you have a commercial premises? If so, the coronavirus pandemic may have affected your business rates and insurance policy.

Tom Harrison
Content writer
6
minute read
Do you know someone who could benefit from this article?
Posted 8 APRIL 2021

Please note: The information in this article was correct at the time of publication on 8 April 2021, but, because of the impact of COVID-19, things are changing rapidly. We aim to keep this page updated, but please check with your insurance provider or potential provider directly to confirm any details.

How has coronavirus affected business rates and business premises insurance?

As a result of the coronavirus pandemic, government measures have meant many businesses have had to close their premises. Others have been left unoccupied as staff are asked to work from home where possible.

This means many buildings across the country will be left unoccupied for an unknown duration.

If you’re a business owner who owns their premises, or you’re the tenant or landlord of business premises, you may be wondering how this will affect your rates, your insurance policy and more.

What government help is available around business premises during the coronavirus pandemic?

The government has introduced a number of measures to support various types of businesses during this tough time, whether you’re the owner or occupier of business premises.

Support for leisure, hospitality and retail business premises

A one-year business rates holiday for leisure, hospitality and non-essential retail premises in England has been extended for three months, so these businesses now won’t have to pay rates until the end of June 2021. 
 
From 1 July 2021 to 31 March 2022, there will be a 66% rates discount for eligible businesses. 
 
The Chancellor also announced a one-off top-up grant worth up to £9,000 per property to help businesses in the sector until spring.  
 
A £594 million discretionary fund is also being made available to support other businesses that aren’t eligible for the grants, but that are affected by coronavirus restrictions. Businesses should apply for the money through their local authorities. 
 
Existing support includes grants worth up to £3,000 for closed businesses, and up to £2,100 per month for impacted businesses once they reopen. 

Support for nurseries

The government’s business rates holiday for the 2020/21 tax year also applied to nurseries and has been extended until the end of June. To be eligible, nurseries must be: 

  • occupied by providers on Ofsted’s Early Years Register
  • wholly or mainly used for the provision of the Early Years Foundation Stage

Support for small businesses

The Coronavirus Business Interruption Loan Scheme (CBILS) provides financial support to smaller business affected by coronavirus and is open until 31 March 2021.

Read more on CBILS

The Bounce Back Loan Scheme (BBLS) helps small and medium-sized businesses to borrow between £2,000 and up to 25% of their turnover. The maximum loan available is £50,000. Applications are open until 31 March 2021. 

Read more on BBLS

These initiatives will be replaced by the Recovery Loan Scheme, announced in the Budget. Aimed at helping UK businesses recover and grow following the pandemic, it will offer access to loans, overdrafts and invoice and asset finance. The scheme will run from 6 April to 31 December.  

What support is available for businesses in Wales?

The Welsh government has promised to support businesses through rate reliefs and grants. These include: 

  • A rates holiday for retail, leisure and hospitality businesses with a rateable value of £500,000 or less for 2020-2021 and extended for a further 12 months 
  • A rates holiday for leisure and hospitality businesses with a rateable value of over £500,00 for 2021-2022 
     
     
    See more on COVID-19 support for business in Wales.
     
    BBLS and CBILS are also available in Wales.  

What support is available for businesses in Scotland?

The Scottish government has offered a package of support for businesses:

  • 100% non-domestic rate relief for retail, hospitality and leisure businesses until at least 30 June 2021 

  • 1.6% relief for all properties until 31 March 2021 

  • Non-domestic rates relief through the Small Business Bonus scheme if the combined rateable value of all your business premises is £35,000 or less and the rateable value of individual premises is £18,000 or less.  

A one-off top up grant is also available, awarding:

  • £25,000 grants for larger hospitality businesses on top of a four-weekly £3,000
  • £6,000 for smaller hospitality businesses on top of a four-weekly £2,000
  • £9,000 for larger retail and leisure businesses on top of a four-weekly £3,000
  •  £6,000 for smaller retail and leisure businesses on top of a four-weekly £2,000 

Businesses required to close or significantly change their operations as a result of COVID-19 restrictions may also be eligible for grants from the Strategic Framework Business Fund.

The wider business support package from the Scottish government is worth over £2.3 billion. 
 
CBILS and the BBLS are available to eligible businesses in Scotland too. 

What support is available for businesses in Northern Ireland?

Eligible businesses in hospitality, leisure, tourism, retail and childcare will pay no rates from 1 April 2020 until 31 March 2021.  
 
The Localised Restrictions Support Scheme (LRSS) offers eligible small businesses £800, medium-sized businesses £1,200 and large businesses £1,600 for every week restrictions apply. 
 
The Covid Restrictions Business Support Scheme (CRBSS) is open to businesses that don’t qualify for the LRSS but are required to cease trading. Businesses that are part of the supply chain to an affected business may also qualify. 

Read more on CRBSS.

There is also specific support available for some businesses, including:

  • Charitable Exemption for rates, offering charitable bodies 100% relief
  • Sports and Recreation Rate Relief, providing sport and recreation bodies 80% relief on the parts of their premises that are used for sporting purposes. Community amateur sports clubs receive 100% relief
  • Industrial Derating, which provides manufacturing businesses with a 70% reduction in rates
  • Non-Domestic Vacant Rating, where rates will be payable on vacant non-domestic properties at 50% of the normal level

The Northern Irish Government’s Small Businesses Rate Relief Scheme and Rural ATM rates relief will continue until further notice.

CBILS and the BBLS are available to eligible businesses in Northern Ireland too.

What help is available to the tenants of business premises during the coronavirus pandemic?

UK businesses are currently protected from the threat of eviction until the end of June 2021, except in the most serious circumstances. This is being kept under review by the government. 

What will happen if my premises are going to be unoccupied for a long period?

Many commercial property insurance policies contain wording that forbids the owner from allowing the building to be unoccupied for long periods.
 
However, during periods of the coronavirus pandemic, the government has ruled that only certain key workers are allowed to go to their usual place of work. This means that many business premises in the UK will likely remain closed for much of the pandemic.
 
It’s also unlikely you’ll be able to install temporary security staff for your premises, as these aren’t considered key workers.
 
It’s important you follow the government’s advice and stay indoors whenever possible, which means avoiding travelling to your commercial premises.

What should I do if my commercial property is going to be left vacant?

There can be an increased risk of damage to properties left unoccupied for a period of time – fire, water leaks or theft, for example. Where you’re able and safe to do so, try to ensure everything is left secure, and follow advice to minimise these risks. You may wish to seek guidance from your policy provider of what measures should be taken.

Some policies include clauses around maximum amounts of time a property can be left unoccupied for, which could be difficult to follow while the UK is in lockdown. It’s important that you check your policy to understand your specific requirements and, if you can’t meet any, like providing on-site security, please talk to your insurance provider for advice.

Should I cancel my existing policy and take out special Unoccupied Property Insurance?

According to advice from the Association of British Insurers (ABI), there should be no need to cancel your existing policy, as most insurance providers are working hard to help their customers through this difficult time. But it’s always best to check with your insurance provider for details.
 
However, if you feel that your commercial premises are going to be completely unoccupied for a long period of time, and you’re worried about specific risks, like fire, theft or escape of water, you may want to take out a more comprehensive insurance policy.
 
In any case, the first thing you should do is speak to your existing insurance provider, as they may be able to offer you special support, or make changes to your policy wording.

Looking for a quote?

Compare business insurance from leading providers

Get a quote
Get a business insurance quote and you could start saving now Start a business insurance quote