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Business Rates in the City
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UK Government Support for Business
COVID-19 Additional Relief Fund (CARF)
The guidance for the above relief has been released by Central Government. Please see the following link: COVID-19 Additional Relief Fund (CARF): local authority guidance - GOV.UK
City of London COVID-19 Additional Relief Fund (CARF) Scheme
This is a government discretionary scheme to support businesses that had not previously received assistance through the Pandemic. It requires local authorities to provide an allowance/relief against a ratepayers NNDR/Business Rates liability. This is not a grant and will be applied to a ratepayer’s business rates account.
The City’s scheme will provide relief of around 20% against the net 2021/22 NNDR liability of office properties that meet the scheme’s eligibility criteria.
Local authorities have discretion to provide NNDR relief (not grants) to businesses in relation to the 2021/22 liability year. The only conditions are that a local authority should: -
• not award relief to businesses that have received Extended Retail Discount (a NNDR discount covering Retail, Hospitality & Leisure) or which have received the Nursery Discount.
• not award relief to a property for a period it was unoccupied.
• direct support towards ratepayers who have been adversely affected by the pandemic and have been unable to adequately adapt to the impact.
For the reasons given above, the City of London scheme will include the City’s office properties with a Valuation Office analysis code of CO, COO, COS and COW, and with a net debit liability for 2021/22.
Due to the limitation in funding for the scheme, it has been necessary to set a cap for the rateable value and only support offices with a rateable value of less than £350,000. In these circumstances approximately 13,900 properties would qualify for relief. This cap will ensure that SME businesses will receive some support and that the relief that can be awarded is at a level that may make a material difference to the business rate bill. By applying a 10% reduction to the rateable value of the property it will translate to relief of approximately 20% of the bill. The relief will be applied after any other reliefs have been applied to the account.
Please note that where there is a continuing liability in 2022/23, credit balances will be moved forward and offset against the 2022/23 liability. If the account is closed and there is no outstanding liability against the account, then a refund can be claimed.
It is assumed that all office businesses will have in some way been adversely affected by the pandemic. The City Corporation therefore proposes to automatically award the relief to all eligible office properties as outlined above. The City will write to eligible businesses to confirm the award of the relief. We aim to have the relief applied to all eligible accounts by the end of July 2022.
A business will have the opportunity to opt out of the scheme if they have not been adversely affected by the pandemic and/or have exceeded the Subsidy Control limits (see below).
Properties that are not eligible for this relief
Most of the City’s businesses are in office accommodation and this sector has received very little support. The scheme is therefore designed to assist this sector. The following is a summary of the main property types that will be excluded from the City’s proposed scheme (in addition to Retail, Hospitality & Leisure properties) due to the relatively limited funding available:
- Workshops and warehouses
- UK power networks
- Site huts
- Advertising rights and phone masts
- Financial institutions, e.g., Banks
- Libraries, ambulance stations and police stations
- Schools and colleges
- Hospitals, surgeries, and clinics
- Car spaces, garages
The government guidance advises that Subsidy Control (formerly State Aid) will apply to this relief through the Small Amounts of Financial Assistance Allowance and the Covid-19 Additional Relief Fund Allowance. This means, that businesses can receive the CARF allowance providing the business has not received more than £2,243,000 in State Aid / Subsidy Control within the last 3 years. Furthermore, a business that has exceeded this limit could still receive a further £10m if it meets specific Subsidy Control eligibility criteria under the Covid-19 Additional Relief Fund Further Allowance element of Subsidy Control. It is the responsibility of the business to notify the City if they will exceed the subsidy limit so that the relief can be removed.
Under the business rates retention arrangements, introduced from 1 April 2013, local authorities keep a proportion of business rates raised.
However, due to the amount of rates collected by the City of London Corporation, it pays a tariff to central Government to be redistributed to local government. As a result, the amount retained is quite small compared with the amount collected.
The City Corporation share of rate income and the income from its council tax payers is used to pay for the services provided by us and other local authorities in your area.
Because of its special circumstances - notably its very small resident population and high daytime population - the City Corporation can set its own rate and retain part of the proceeds to help pay for the services it provides. The City Corporation keeps the sum resulting from the premium which has been levied, following consultation, to further enhance the Police Service, security, resilience and contingency planning in the City.