Government to review business rates relief

The Treasury has published a discussion paper on the issue, which is worth about £1.5bn a year to charities

Charity shops
Charity shops

The government is to review relief granted on business rates, which is worth almost £1.5bn a year to charities.

The Treasury has this week published a discussion paper on reforms to business rates in England, which includes questions about the basis of the business rates system as a whole and how it could be reformed.

The document says that the many reliefs in the business rates system "vary widely in eligibility and generosity".

It says: "In addition, local authorities have the power to grant business rates discounts to local ratepayers. Each rule has been designed in order to encourage certain behaviours or support those taxpayers who need it most.

"This review is an opportunity to evaluate the impact of business rates reliefs and exemptions. The government wants to consider whether each relief and exemption is achieving its intended aim in the most effective and appropriate way."

The paper says that of the £3.84bn in business rates relief that is expected to be granted in 2014/15, £1.46bn is granted because of premises being occupied by charities.

It says the government recognises that some sectors, such as farming and charities, play an important part in the community.

"The government does not intend to increase business rates for those most deserving of relief or exemption and it wants to consider carefully the impacts of any change," it says. "It therefore welcomes evidence and analysis to support its decision-making."

Michael Birtwhistle, senior policy officer at the National Council for Voluntary Organisations, said in a blog post yesterday that his organisation would be emphasising the importance of the exemption for charities in its response.

"The paper recommends no changes to the existing exemption for charities, but there are potential implications for local government income, which could have a knock-on effect for voluntary sector organisations," he said. "We’re of the view here that this is really important: business rate relief is hugely significant to a wide range of charities."

The consultation runs until 12 June.

Earlier this month, the NCVO was one of four charity umbrella bodies that called on the government not to give anti-avoidance powers to local authorities as part of moves to clamp down on the abuse of business rates relief, in case charities were adversely affected.

They were responding to a consultation published in December by the Treasury and the Department for Communities and Local Government, which contained proposals to deal with the abuse of business rates relief.

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