Changes to business rates might harm charities, say NCVO and CFG

Their response to a consultation says proposals could lead to a reduction in the discretionary level of rate relief offered to charities by councils

Changes to rates levied on property 'could harm sector'
Changes to rates levied on property 'could harm sector'

The National Council for Voluntary Organisations and the Charity Finance Group have warned that proposed changes to business rates might harm charities.

Both organisations made the claims in response to a consultation document, Business Rates Retention: technical consultation, put out by the Department for Communities and Local Government, which closed on Monday.

The department proposes to increase the level of business rate retained by local authorities from 25 per cent to 50 per cent by 2013.

A joint statement from the NCVO and the CFG said the move would encourage local authorities to collect greater levels of business rates and might result in some councils reducing the levels of discretionary rate relief they offer in order to do so.

Charities are eligible for 80 per cent mandatory business rate relief but often receive discretionary relief on the remaining 20 per cent from the relevant local authority.

"Our concern is that this will result in local authorities being less likely to grant discretionary relief to charities in the future because they will gain a greater share of the money that each charity pays through business rates," the joint statement  said.

"The reliefs that organisations currently claim play a crucial part in enabling them to operate successfully. Any changes that lead to an incentive for local authorities to cut discretionary rates will take much-needed money out of the charity sector and should be avoided.

"For organisations that are already operating in a tough financial climate, this would be an unwelcome and harmful consequence, potentially stunting the growth of local community action."

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