Welsh government proposes business rate relief cut for charity shops

Charity Retail Association warns of potential 'serious damage' as Edwina Hart, Welsh business minister, unveils plan to cut relief from 80 to 50 per cent

Edwina Hart
Edwina Hart

The Welsh government has unveiled proposals to reduce the business rate relief for charity shops in Wales from 80 to 50 per cent from 2022.

In a statement to the assembly’s chamber yesterday, Edwina Hart, the Welsh business minister, announced that a consultation would be held on business rate relief for charities, social enterprises and credit unions. The consultation document contains 10 recommendations made by a review group led by Brian Morgan, professor of entrepreneurship at Cardiff Metropolitan University.

The Charity Retail Association said the recommendations, if adopted, would be a "new tax on charities" and could "seriously damage charities in Wales". An emergency summit would be held with Welsh member charities to discuss the impact of the proposals on the charity sector, the CRA said. The association called on Hart to attend the meeting to hear directly from charities.

Among the recommendations are new thresholds for charity shop rate relief to limit the amount of relief for charity shops that occupy premises of higher rateable values. These changes should be phased in for existing charity shops from next year, the document says.

Under the proposals, 80 per cent rate relief would be available on properties with rateable values of up to £12,000. All charity shops would receive 80 per cent relief on the first £12,000 of the rateable value. Rate relief would then be reduced to 50 per cent on the next £24,000 of rateable value. For properties with annual rental values of more than £36,000, the business rate relief would be zero.

The consultation also recommends that any "zoning" or limiting of the number of charity shops in an area should be done at local authority level.

The recommendations are based on evidence gathering led by Morgan, who first proposed limiting tax relief for charity shop in his Business Rates Wales Review, published last summer.

Warren Alexander, chief executive of the CRA, said: "If adopted, these recommendations will constitute a new tax on charity by the Welsh government. Charity shops receive a relatively small business rate relief subsidy to do this: an estimated £3.4m, compared with £75m for small businesses.

"We are dismayed that, despite our attempts to engage with Professor Morgan and make positive suggestions to address issues raised about charity shops, the final report appears to have gone even further than expected in restricting charity shops in Wales, regardless of the evidence available about what is causing high street decline or what impact this will have on Welsh communities."

Hart said the Welsh government’s intentions would be set out before its summer recess began on 22 July.

You can respond to the consultation by emailing businessrates@wales.gsi.gov.uk.

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