Explained: The spending review and what it means for your business rates

Business rates are an obligatory cost for most businesses.

As the pandemic hit in March, the government introduced a 12-month business rates holiday across the retail, hospitality and leisure sectors, and the Government has said that the package is currently providing relief for companies worth over £10 billion.

On Wednesday, Chancellor Rishi Sunak revealed his Comprehensive Spending Review.

He forecast that the economy will shrink this year by 11.3 per cent - "the largest fall in output for more than 300 years" - and stated that Britain's economic output is not expected to return to pre-crisis levels until the fourth quarter of 2022.

Sunak said "long-term scarring" is also expected to mean that by 2025, the economy will be around three per cent smaller than expected in the March 2020 Budget.

He outlined how the Government is to provide £280 billion this year to help get the country through the coronavirus crisis.

Here we explain what this new CSR announcement will mean for your business rates going forward:

What did the chancellor announce today about business rates in 2021?

The Government has said: "To help businesses, the business rates multiplier will be frozen in 2021-22, saving businesses in England £575 million over the next five years."

Will the business rates holiday be extended?

The business rates holiday is currently set to run until April. As well as freezing the multiplier, teh Government said it is "also considering options for further Covid-19 related support through business rates reliefs".

It stated: "In order to ensure that any decisions best meet the evolving challenges presented by Covid-19, the Government will outline plans for 2021-2022 reliefs in the new year."  

The announcements today met with mixed responses from business. Here is what some industry leaders and experts had to say on the business rates relief situation:

Helen Dickinson, Chief Executive of the British Retail Consortium, said: "We are encouraged that the government is considering options for further rates relief for businesses affected by Covid. Many retail businesses have been shuttered for the past month, depriving them of £8bn in sales.

"A return to full business rates liability in April would be impossible for some firms to meet and freezing the multiplier in 2021/22 does not solve this problem.

"The Government should adopt our proposal for business rates relief at 50% which reflects the fall in retail property values and brings market reality into the system, while generating much needed revenue for the Treasury.

"This, along with an extension to the moratorium on debt enforcement, to encourage constructive dialogue between landlords and tenants on rents, will support the resilience of the retail industry. This would allow the industry to invest in the future and play its part in the economic recovery of the UK."

Jerry Schurder, head of business rates at specialist real estate advisers Gerald Eve, said: “While I have some sympathy with the Government waiting until the new year to decide changes to business rates from April ... the lack of certainty is a blow to ratepayers across the country."