Calderdale Borough Council in West Yorkshire has approved plans to end discretionary rate relief for national charities that operate shops in its area in order to make savings of £50,000.
The local authority agreed the revised scheme, to be introduced from April 2015, at a full council meeting this week. The changes are designed to focus discretionary rate relief on supporting smaller local organisations, the council said.
It will stop discretionary rate relief for charity shops whose head office and main focus are outside Calderdale. Relief will also be reduced for organisations with incomes of more than £100,000 a year.
Charities are and will continue to be eligible for 80 per cent mandatory rate relief from central government. Local authorities can choose to grant the remaining 20 per cent rate relief at their discretion.
The council said it had reviewed the scheme partly because of increasing demand for discretionary rate relief, but mainly because of changes made by the government to its rate relief funding arrangements, which were introduced with the Business Rates Retention Scheme in April.
Previously, local authorities contributed 25 per cent and the government 75 per cent of the discretionary rate reliefs. But under the changes brought in last April, Calderdale council said its costs would increase to 50 per cent of the discretionary part of the relief.
Wendy Mitchell, head of policy and public affairs at the Charity Retail Association, said other councils had reduced their discretionary rate relief because of financial pressures rather than a change in policy.
"Local authorities have been changing their policy in some areas because of a squeeze on their finances," she said. "We are watching and waiting to see how much the Business Rates Retention Scheme will affect charity shops."
Plymouth City Council in Devon reduced the discretionary rate relief for the nine charities that were receiving the top-up to their mandatory relief in August last year.
The council has saved £250,000 through changes to its discretionary rate relief scheme for all types of businesses, including charity shops.