How will COVID-19 affect my business rates and commercial premises insurance?
How will COVID-19 affect my business rates and commercial premises insurance?
Do you have a commercial premises? If so, you may be wondering how the coronavirus pandemic will affect your business rates and insurance policy.
Please note: The information in this article was correct at the time of publication on 7 April 2020, 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, while others will be 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.
These businesses will also be able to apply for cash grants of up to £25,000 per property, depending on the rateable value:
- £10,000 if the business has a rateable value up to £15,000
- £25,000 if the business has a rateable value between £15,000 and £51,000
The Welsh government will offer the same relief to these businesses in Wales.
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 Government has also announced they will provide additional Small Business Grant Scheme funding for local authorities in England, to support small businesses that already pay little or no business rates because of small business rate relief (SBRR), rural rate relief (RRR) and tapered relief.
They will provide a one-off grant of £10,000 to eligible businesses, to help meet their ongoing business costs.
What support is available for businesses in Wales?
The Welsh Government has promised to support businesses through rate reliefs and grants. These include:
- grants of £10,000 for micro-businesses employing up to nine people
- grants of up to £100,000 for small and medium-sized firms with between 10 and 249 employees.
- support for larger Welsh companies, which are of critical social or economic importance to Wales.
There is also a £500 million Economic Resilience Fund available for businesses forced to go into “hibernation”.
What support is available for businesses in Scotland?
The Scottish Government will offer a package of support for businesses:
- A full year’s 100% non-domestic rate relief for retail, hospitality and tourism businesses
- £10,000 grants for small businesses in receipt of the Small Business Bonus Scheme or Rural Relief
- £25,000 grants for hospitality, leisure and retail properties with a rateable value between £18,000 and £51,000
- 1.6% relief for all properties, effectively freezing the poundage rate next year
In total, the Scottish Government has promised £2.2billion in relief for businesses in Scotland.
What support is available for businesses in Northern Ireland?
All business rates payers in Northern Ireland will get a three-month business rates holiday, meaning the first business rate bills will arrive in June. This will be shown as a 25% reduction on annual rates.
There is also specific support available for some types of business, 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 has also created a £10,000 Small Business Grant Scheme, and have announced that both the Small Businesses Rate Relief Scheme and Rural ATM rates relief will continue throughout 2020.
What help is available to the tenants of business premises during the coronavirus pandemic?
The Government has declared that commercial tenants in England, Wales and Northern Ireland, who can’t afford to pay their rent because of COVID-19, will be protected from eviction.
These measures will mean no business will automatically forfeit their lease and be forced out of their premises, if they miss a payment up until 30 June.
The Government has also declared that they may extend this window of protection if necessary.
But they have stated this is not a rental holiday, meaning tenants will still be liable to pay the rent they owe.
As of 2 April, it’s unclear if this policy extends to tenants in Scotland. The Scottish Government has made clear its support of the emergency coronavirus bill, which includes the policy protecting commercial tenants from eviction, but is yet to declare its own policy for Scotland.
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 the coronavirus pandemic, the Government has ruled that only certain key workers are allowed to go to their usual place of work. This means most business premises in the UK will likely remain closed for the duration 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, such as fire, water leaks, or theft. 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 durations 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. However, 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, such as 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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