Charity Finance Group says business rates bill will be £432m in 2019/20

This, it says, will be more than double the amount charities paid at the beginning of this decade

Business rates: CFG predicts huge rises
Business rates: CFG predicts huge rises

Charities will be paying £432m in business rates in 2019/20, more than double the amount they paid at the beginning of the decade, the Charity Finance Group has estimated.

According to the CFG, the charity sector in England will spend £222m more on business rates by 2019/20 than the £210m it spent in 2010/11.

The latest data comes after the Department for Communities and Local Government released a set of estimates for business rates in the 2016/17 and 2017/18 financial years. These said English charities could expect to pay a business rates bill totalling £348m in 2016/17, rising to £391m in 2017/18.

The CFG also conducted polling of the general public with the Institute of Fundraising, carried out by ComRes, that found only 17 per cent of respondents believed charities should pay business rates.

The polling found that only 15 per cent and 11 per cent of respondents believed that charities should pay VAT and the insurance premium tax.

The CFG has also written to Philip Hammond, the Chancellor of the Exchequer, before next month’s Budget highlighting the "significant cost burdens" on the charity sector caused by business rates.

The letter says business rates are diverting resources from front-line activities and the situation is exacerbated in poorer areas of the country, where councils have a weaker tax base and are less likely to award charities 20 per cent discretionary rate relief on business rates.

Charities are granted mandatory relief on 80 per cent of business rates and can be granted relief on the remaining 20 per cent at the discretion of local authorities.

In the letter, the CFG calls on the government to grant charities 100 per cent business rate relief.

It says: "This would be fair, would cut red tape and ensure that those that most need help receive it.

"It is one of the biggest changes that government could make to support the charity sector.

"This would also ensure that there was not any potential loss of charitable services and activities due to revaluation of business rates.

"Given that raising revenue from charities is not the primary purpose of business rates, we believe that this is an outcome that the government will wish to avoid."

Andrew O’Brien, head of policy and engagement at the Charity Finance Group, said: "There is a perception among the public that charities are tax-free. This is simply not the case. Although we do receive support towards paying business rates, many charities are still paying substantial amounts.

"This, alongside taxes such as IPT and irrecoverable VAT, should be seen as indirect taxes on people’s donations because it means that there is less money left over to help beneficiaries. It is time to correct this anomaly and create a simpler system that will see charitable resources flowing to where they should go, furthering charitable objectives."

The Budget will take place on 8 March.

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