Chancellor’s business rates subsidy of £8 million covers just 7% of Heathrow’s £120m bill

Heathrow is angry that it is having to pay most of its business rates, while supermarkets and many other businesses are given a 100% waiver.  The government has given airports a subsidy of up to £8 million each this year, to pay their business rates. That is enough to cover the whole amount, for small airports. But Heathrow says it only covers 7% of their rates bill, of almost £120 million, part of which it pays to Hillingdon Borough Council. Heathrow is struggling with a drop of around 82% in its passenger number. It is having to furlough its entire senior management team except its chief executive, to cut costs. Gatwick is probably due to pay £29m in business rates this year, while Manchester and Stansted face bills of £14m and £12m respectively, so the £8 million will not cover their rates bills either. Supermarkets have been given around £1.9 billion in rates help, because initially it was feared there could be problems with food supply. In fact supermarkets have done very well out of Covid, with less food eaten out of the home. Chancellor Rishi Sunak said: “… we have supported them throughout this crisis through the job retention scheme, loans and tax deferrals.”
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Business rates subsidy covers just 7% of Heathrow’s £120m bill

Heathrow – which has lost its crown as Europe’s busiest airport – is due to pay £120m in business rates this year

By Oliver Gill (The Telegraph)

24 November 2020

Heathrow has bemoaned a multimillion-pound subsidy from taxpayers that will cover just 7% of its annual business rates bill.

Ministers handed grants to airports in England equivalent to their annual business rates bills, in the first sector-specific invention of the coronavirus crisis.

However, a decision to cap the subsidy at £8m per site means the support will only cover a fraction of larger airports’ overall bill.

Heathrow, which is taking legal action against the Treasury over its decision to scrap tax-free shopping, is the UK’s biggest business rates payer with a bill of nearly £120m in the current year.

The £8m limit means the state support is less than a fifteenth – of Heathrow’s business rates costs.

The airport said on Friday it planned to furlough its entire senior management team except its chief executive to cut costs. 

Airports across England and Wales face business rates bills of more than £200m in 2020/21, according to property specialist Altus Group.

Gatwick is due to pay £29m in business rates this year, while Manchester and Stansted face bills of £14m and £12m respectively, experts said.

Leaders from the aviation industry, one of the hardest hit by the pandemic, have railed at business rates holidays handed to other sectors such as retail and hospitality. Supermarkets, which have remained open throughout the Covid restrictions, have received a £1.9bn tax break from the Treasury. (See article about opposition to this supermarket benefit). 

The business rates relief came as Grant Shapps, the Transport Secretary, announced a “test and release” system to reduce a two-week travel quarantine down to five days from Dec 15.

A spokesman for Heathrow said: “While we welcome the Government’s recognition that airports have been devastated by Covid-19 and are struggling to survive under the burden of massive rates bills, today’s announcement doesn’t go far enough. The proposed reduction in business rates for Heathrow is only 7&, compared to an 82% reduction in passenger numbers.

“Small airports in England, and all airports in Scotland and Northern Ireland have had a 100% waiver from business rates – even the big supermarkets, which are booming, have enjoyed 100% waiver from business rates. The Government’s proposed approach is discriminatory against large airports, and we will now carefully consider our next steps.”

The funding is crucial for smaller regional airports, however.

Andrew Bell, chief executive of Regional & City Airports that owns Exeter and Bournemouth, said he was pleased the Government had listened to the industry’s calls.

“The measures announced today will provide much-needed support and we will continue to lobby hard and work with Government on what other steps can be taken to safeguard the UK’s regional airports,” he said.

Chancellor Rishi Sunak said: “The aviation industry is vital to our economy – creating jobs and driving growth- which is why we have supported them throughout this crisis through the job retention scheme, loans and tax deferrals.

“This new package of support for airports, alongside a new testing regime for international arrivals, will help the sector take off once again as we build back better from the pandemic.”

Karen Dee, chief executive of Airport Operators Association said the new measures will help many embattled airports through the challenging months ahead.

“However, not all airports will see full business rates relief and all of aviation will continue to face considerable challenges over the coming months and years,” she said. “We will therefore need to continue to work with Government on what other steps can be taken to safeguard the UK’s aviation businesses.”

Meanwhile, Willie Walsh, the former boss of British Airways owner IAG, is to take over as director general of IATA, the global airlines trade body from April 2021.

https://www.telegraph.co.uk/business/2020/11/24/business-rates-subsidy-covers-just-7pc-heathrows-120m-bill/

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English airports to benefit from new £100m covid support package

More than 20 airports will be eligible for up to £8m in funding each to be used for fixed costs and to support ground handling crews

By Tamlyn Jones, Business Reporter  (Birmingham Post)

24 NOV 2020

Commercial airports across England and ground handlers serving them will benefit from up to £8million each under a new government finance package.

Chancellor Rishi Sunak has said the £100million package will from next year provide support for 24 airports which have been hit by travel restrictions placed as a result of the coronavirus pandemic.

It will be used to address fixed costs and be the equivalent to the business rates liabilities of each airport in 2020/21, capped at £8million per site and subject to certain conditions.

It comes as a new Covid-19 testing regime is being introduced for passengers returning to English airports which could see them avoid having to quarantine for the full 14-day obligatory period.

Mr Sunak said: “The aviation industry is vital to our economy – creating jobs and driving growth – which is why we have supported them throughout this crisis through the Job Retention Scheme, loans and tax deferrals.

“This new package of support for airports, alongside a new testing regime for international arrivals, will help the sector take off once again as we build back better from the pandemic.”

The airports to benefit from the package are:

Birmingham
Bournemouth
Bristol
Carlisle
Doncaster Sheffield
East Midlands
Exeter
Gatwick
Heathrow
Humberside
Isles Of Scilly
Lands End
Leeds Bradford
Liverpool John Lennon
London City
Luton
Manchester
Newcastle
Newquay
Norwich
Southampton
Southend
Stansted
Teesside International Airport

…then the article continues about Covid testing of air passengers ….

https://www.business-live.co.uk/economic-development/english-airports-benefit-new-100m-19336234

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See also.

Supermarkets should pay back £1.9bn Covid business rates relief, say MPs

Conservative and Labour MPs say taxpayers’ money not needed by big chains, who are paying out dividends

By Jasper Jolly (The Guardian)

Sun 15 Nov 2020

Big supermarkets should hand back almost £2bn in business rates relief on offer during the coronavirus pandemic because they are paying out dividends to shareholders, according to a former minister in Boris Johnson’s government.

The government introduced a 12-month break on business rates in March across England and Wales because it feared the pandemic would strain retailers’ finances, potentially threatening their ability to feed the country. However, the reality proved very different, with big supermarkets enjoying a sales boost, albeit with higher costs.

In total the big six supermarkets – Tesco, Sainsbury’s, Asda, Morrison, Aldi and Lidl – will save £1.9bn in bills during the tax year to 31 March 2021, according to figures from Altus Group, a property adviser.

 

And it continues ….  see full article at
https://www.theguardian.com/business/2020/nov/15/supermarkets-should-pay-back-19bn-covid-business-rates-relief-say-mps

 


Heathrow-based companies launch group action against taxman on rates

Sept 3, 2020

Express & Star

The firms have launched proceedings seeking ‘substantial and prolonged reductions’ in business rates.

More than 70 airport businesses based at Heathrow have brought a group action against the UK tax authorities in a bid to secure business rates reductions and are expected to discuss a settlement next week.

Cargo, freight and baggage handling firms are among companies based at the airport who have continued to face significant business rates payment throughout the pandemic despite a dive in passenger numbers.

In England and Wales, businesses providing handling services at airports are liable for full rates while counterparts in Scotland have been handed a 100% rates holiday.

The companies based at Heathrow, Europe’s busiest airport, have now launched the proceedings seeking “substantial and prolonged reductions” in the property tax.

It comes a day after Heathrow airport itself said it has started consulting with unions over pay cuts in a process which could lead to job losses due to low traffic numbers.

It is understood that real estate adviser Altus Group is advising the group of companies, having lodged two separate “group pre-challenge review” requests with the Valuation Office Agency arm of HMRC.

Settlement discussions are set to start on Monday September 7 regarding the first request, which relates to those operating on the periphery of the airport such as freight and cargo services.

A second request has been made which relates to airline services let out at the airport such as passenger lounges, baggage handling services and engineering bases.

If a settlement is not reached, the cases could move forward to an independent valuation tribunal.

Robert Hayton, head of business rates at Altus Group, said: “The requests are directly related to the substantial physical impact upon the property and its overall physical environment of numerous legislative, policy and associated matters introduced as a result of the Covid-19 pandemic both within the United Kingdom and wider.

“The impact that coronavirus has had on airports, as well as those businesses operating in and around the sites, are already obvious and grounds exist to support a substantial and prolonged reduction through the business rates system.”

John Holland-Kaye, chief executive of Heathrow Airport, has previously called the Government to match support for retailers with rate holidays with similar support for airports.

He recently told the Aviation Club: “Most countries get this … But once again it seems that our government has taken the opposite approach to the rest of the world.

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“There has been no support for the aviation sector beyond the job retention scheme.

“While Tesco and Sainsbury’s have had their business rates waived for a year, airports have had no relief.”

A Valuation Office Agency spokesman said: “We have received a number of requests from ratepayers to consider material change of circumstances due to the Covid-19 pandemic.

“We are working through these and cannot speculate on the outcomes or comment on any individual cases.”

https://www.expressandstar.com/news/uk-news/2020/09/03/heathrow-based-companies-launch-group-action-against-taxman-on-rates/

 


NO 3RD RUNWAY COALITION PRESS RELEASE

4 June 2020

HEATHROW TRYING TO GET OUT OF PAYING BUSINESS RATES BILL

Heathrow Airport is trying to get out of paying its £113m business rates bill, according to an annual review of business ratepayers by Altus Group, a real estate adviser (1/2).

Heathrow owes £113.2m of business rates for the current tax year, the highest of any site in England and Wales. Heathrow’s business rates are split between Hillingdon Council – the local authority, which receives £16.3m, with the remainder of the bill going to the Greater London Authority and central Government.

The rates are calculated in accordance with an estimation of Heathrow’s rental value, as at 1 April 2015 (1).

The Airport argue that their rates bill should be cut because it was “based on a world in which people flew”, but campaigners believe that they should be paying the full £113million bill on the basis that the money goes towards the community and a failure to pay could jeopardise many local projects that are funded through the rates.

Paul McGuinness, Chair of the No 3rd Runway Coalition, said: “Heathrow’s claim that their rates bill is ‘based on a world in which people flew’ is inaccurate and self-pitying, and it should be given short shrift. “Rates are calculated on a property’s annual market rental value and size. And not on the current success, or otherwise, of the business operating it.

Moreover, a responsible company is expected to set aside (preferably in a separate account) all its anticipated tax liabilities. “And, lest we forget, the rates bill that they owe to the community – from which they now seek exemption – is broadly the same size as the £100m dividends payment that they made, so willingly, to their foreign shareholders just a few weeks ago”.

ENDS.

Notes:

1. UK airports face multimillion-pound business rates bills, FT, 1 Jun 20 https://www.ft.com/content/010d4115-47de-4e35-92c1-6c67cee9af37

2. Atlus Group, Annual Business Rates Review 2020 https://property.altusgroup.com/business-rates/annual-business-ratesreview-2020/

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See earlier:

 

UK airports face multimillion-pound business rates bills – money that should be paid to councils

Heathrow and Gatwick airports are facing £ multi-million business rates bills, despite the pandemic having grounded aircraft and dramatically cut their incomes.  The airports are among thousands of UK companies set to appeal against their rates bills. Heathrow apparently owes £113.2m for the current tax year, the highest of any site in England and Wales, according to an annual review of business ratepayers by Altus Group, a real estate adviser. Gatwick has the next biggest bill at £29.2m.   Business rates, which are paid to local councils, are calculated on the basis of rateable values — effectively an estimate of a property’s rental value at a given date. Rateable values are set according to rents on April 1 2015.  They are not based on how well, or how badly, a company is doing.  Heathrow bleated that the rates were based on “a world in which people flew”. The airports argue that rates relief will help them protect jobs.  Some sectors – retail, hospitality or leisure – have been given rates holidays.  The money from the rates is a key part of the income of councils, and if not paid, then the funding and spending of councils is at risk. 

https://www.airportwatch.org.uk/2020/06/uk-airports-face-multimillion-pound-business-rates-bills-money-that-should-be-paid-to-councils/

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