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
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Posted 25 JANUARY 2021

Please note: The information in this article was correct at the time of publication on 25 January 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

Leisure, hospitality and retail businesses in England have been told they will receive a one-year business rates holiday. This means they won’t have to pay business rates for the 2020/21 tax year.

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.

The Retail, Hospitality and Leisure Grant (RHLG) for businesses in this sector closed on 5 October 2020.

Support for nurseries

The government has also introduced a business rates holiday for nurseries in England throughout the 2020/21 tax year, provided they are:

  • 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 Small Business Grant Fund scheme – which supported small businesses that already paid little or no business rates because of small business rate relief (SBRR), rural rate relief (RRR) and tapered relief – closed on 5 October 2020.

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.

Read more on BBLS

What support is available for businesses in Wales?

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

  • A £3,000 payment for hospitality and non-essential retail businesses impacted by level four restrictions. They must also receive small business rates relief and have a rateable value of £12,000 or less 

  • A discretionary £2,000 top-up grant for businesses closed or materially affected by the firebreak lockdown (23 October-9 November).
  • A further discretionary £1,000 grant for businesses that were materially affected by local lockdown measures for 21 days or more before the start of the firebreak lockdown period.

£100 million of further grants have already been allocated.

CBILS and the BBLS are available to eligible businesses in Wales too. The Economic Resilience Fund (ERF) Phase 3 Business Grants is currently suspended due to high demand.

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 tourism businesses, applied automatically for 2020/21 tax year

  • 1.6% relief for all properties, effectively freezing the poundage rate next year

  • 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.

Applications for a £10,000 grant for small businesses in receipt of the Small Business Bonus Scheme or Rural Relief are no longer being considered.

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?

Business rates payers in Northern Ireland will have received a 2020-21 business rates bill issued in early August 2020 that indicates whether they will receive a four-month or 12-month rates holiday.

The Localised Restrictions Support Scheme (LRSS) offers eligible small businesses £800, medium-sized businesses £1,200 and large businesses £1,600. 

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 Scotland 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 21 February, 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.

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