Community Infrastructure Levy will make new buildings more expensive

Charity Tax Group issues warning after the levy becomes law

The introduction of a new land tax means charities that erect new buildings will face increased expense and red tape, say charity finance experts.

The Community Infrastructure Levy, a tax on developments that require planning permission, came into force on 6 April and is expected to be implemented by councils within months.

Helen Donoghue, director of the Charity Tax Group, said charities had an exemption but needed to meet several criteria to qualify, including a requirement that all activity on the site should be for charitable purposes.

"Even though they will have an exemption, they will still have to apply for that, which means more red tape," she said.

Qualifying charities could still miss out because of a technicality, warned Trevor James, a partner at specialist charity accountants Sheen Stickland. He said they had to take several steps in the right order to qualify, including submitting a claim to the local council before starting work and ensuring that development did not begin until the authority granted permission.

He said organisations could lose their levy exemption if they carried out any trading on the premises. "Charities could be in trouble if they use the space for a few weeks for an activity such as selling Christmas cards," he said.

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