Welsh business minister seeks UK government views on business rate relief cuts

Edwina Hart says she wants to understand how the proposal to cut the relief for charity shops sits within a wider UK context

Charity shop: could suffer rate relief cut in Wales
Charity shop: could suffer rate relief cut in Wales

The Welsh business minister has written to the UK government and other devolved administrations to seek their views on cutting business rate relief for charity shops.

In a statement to Welsh assembly members yesterday, Edwina Hart said she would also monitor the issue of new goods being sold in charity shops and encourage charities to play active roles in Business Improvement Districts.

Hart was responding to a consultation on business rates relief for charities and social enterprises, which closed in June, based on recommendations made by a group led by Brian Morgan, professor of entrepreneurship at Cardiff Metropolitan University.

The group’s recommendations included reducing the business rate relief for charity shops in Wales from 80 to 50 per cent from 2022. It also recommended new thresholds for charity shop rate relief to limit the amount of relief for charity shops that occupy premises of higher rateable value.

Hart told Welsh assembly members yesterday that some of the recommendations made by the group would need primary legislation, including those to reduce the amount of rate relief available to charities.

She has written to the UK government and the devolved administration to "understand how the proposals sit within a wider UK context" and "initiate discussion on the recommendations" about rate relief levels for charities and social enterprises, and the wider issue of tax avoidance.

Hart said the Welsh government was waiting for the UK government’s response to the Silk Commission, set up to examine the future of the Welsh assembly’s powers, which recommended the full devolution of the power to set business rates to Wales.

"My focus on business rates policy will not diminish," Hart’s statement said. "I will also continue to examine some of the issues that the group has raised on business rates reliefs for charities and social enterprises."

The Charity Retail Association has been an outspoken critic of the proposals and raised concerns that if they went ahead charities would lose nearly £2m next year.

The Charity Finance Group also joined calls for the recommendations to be rejected.

Both organisations said today that pursuing the proposals was creating uncertainty for charities.

The CRA said it was pleased that the Welsh government had decided not to make any immediate changes, but it was "deeply regrettable" that the opportunity was not taken to throw out the group’s proposals on restricting rate relief completely.

Warren Alexander, chief executive of the association said: "Any change to rate relief would have an impact on the amazing charitable work that is done, create more empty shops and damage our high streets."

The association said it accepted Hart’s proposals to monitor the sale of new goods in charity shops and it supported charities becoming more involved in Business Improvement Districts. But the CRA said it was disappointed that tax avoidance was mentioned because "no evidence has been provided that charity shops are engaged in tax avoidance".

Jane Tully, head of policy and public affairs at the CFG, said: "We are firmly of the view that the Welsh assembly should not take forward its restrictive proposals on limiting rate relief for charity shops in Wales. The delay on a decision and the lack of a firm timeline will create uncertainty for Welsh charities with retail operations.

"Raising the issue with the UK government and other devolved administrations will lead to growing uncertainty there too. We also remain concerned that the group’s report lacks evidence to support its criticisms of charity shops, and that the assumptions underpinning the report demonstrate a lack of understanding of the charity sector and, in particular, the underlying rationale for charity tax reliefs."

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