Give charities 100 per cent mandatory relief on business rates in England, sector bodies recommend

In a joint response to a government consultation, the Charity Finance Group, the NCVO and others say the move would improve fairness and consistency in the rates relief regime

Charity shops
Charity shops

Charities should be given a 100 per cent mandatory relief on business rates, a group of charity sector umbrella bodies has told the government.

In March, the government opened a consultation on reforms to business rates in England – business rates are devolved in Scotland, Northern Ireland and, as of April, Wales.

Of the £3.84bn expected to be granted in England in 2014/15 in relief on business rates, the amount granted because of premises being occupied by charities is expected to total £1.46bn, according to the consultation, which closed on Friday.

Charities are eligible for 80 per cent mandatory relief, and local authorities have discretion to grant relief on the remaining fifth. Several councils have considered withdrawing or reducing this in recent years to save money.

A joint response to the consultation from the Charity Finance Group, the Charity Tax Group, the Institute of Fundraising and the National Council for Voluntary Organisations gives five recommendations.

These include removing the 20 per cent discretionary rate relief and creating 100 per cent mandatory rate relief for all charities. The organisations say this would improve fairness, simplicity and consistency in the rates relief regime, and they recommend this should be introduced in stages over five years.

It also gives three recommendations for the administration of the discretionary relief, whether it remains in place permanently or not. These are that the government should order all local authorities to have "publicly accessible criteria for the award of discretionary rate relief", produce guidance for local authorities on best practice in designing discretionary rate relief and advise all local authorities to give at least one year’s notice if the discretionary relief for charities is withdrawn.

The organisations also recommend that government should clarify the rules "to make clear that where a charity occupies a café or shop as part of its charitable objectives or where it is not occupied by a trading subsidiary that it is not separately valued for business rates".

A separate consultation response from the Charity Retail Association has two recommendations. "We would welcome a commitment that the removal or reduction of mandatory rate relief is not a consideration of the review," it says. "We also recommend the government issues guidance to local authorities to standardise discretionary rate relief policies and administration processes subject to consultation."

According to a 2013 report on charity shops by the think tank Demos, charity shops account for 5 per cent of charitable rate relief in England.

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