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Treasury asks EU to change state aid rules to fund rates cut

By Simon Neville, PA City Editor
The Government has written to the EU calling for them to alter the state aid rules that ban ministers from handing over more than 200,000 euros (£185,000) to each business, the PA news agency understands.

Treasury officials have notified the European Commission that they intend to "disapply rules appertaining to state aid as they expect approval to be granted", according to a Government source.

Councils have also been informed that they should assume the commission will grant the move and can begin informing businesses from which they collect rates.

The move comes after Chancellor Rishi Sunak announced a business rates holiday for all retailers, pubs, bars and others affected by the coronavirus pandemic.

But on Wednesday some retailers were questioning how the payment holiday will work in practice.

Robert Hayton, head of UK business rates at the real estate adviser Altus Group, said the decision will be hugely helpful for businesses.

He said: "It is a huge relief to see that the Chancellor has moved so quickly to mitigate the economic impact of Covid-19 and, by removing the de minimis regulation limit, it brings immediate certainty to the finances of those sectors most affected.

"All companies, irrespective of the size of their estates, benefit in full from the enhanced exemptions."

The support, thought to be about £20 billion, is aimed at helping the most-affected firms manage their cashflow through this period.

In addition to the 100% rates cut for 12 months, grants to small businesses eligible for small business rate relief is up from £3,000 to £10,000.

Further funds of £25,000 grants to retail, hospitality and leisure businesses operating from smaller premises, will also be available.
A Treasury spokesman said: "We have not asked the commission to scrap state aid rules.

"We welcome the commission's proposed state aid flexibilities around Covid-19 and the work they are doing to react to the ongoing economic disruption.

"We believe there is a case for a specific, temporary and targeted business rates intervention, and we have applied to the commission for their approval of the measure."

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