Charities: Don’t miss out on claiming your business rates relief

Claiming mandatory charitable rates relief

Charities are eligible for a mandatory 80% relief on their business rates if a property is used for charitable purposes.

For this to apply, the charity must be the rate payer and use the property ‘wholly or mainly’ for charitable purposes (the term ‘charitable purpose’ is defined in section 2 and 3 of the Charities Act 2011).

The term ‘wholly or mainly’ is broadly considered to mean ‘more than half’ but be mindful that different local authorities may have their own interpretations of this.

If you do carry out commercial operations, the local authority may look at the floor space used for commercial purposes, or the turnover generated from commercial activities, to make their decision.

If you are operating a trading subsidiary, you should check which entity is the tenant, as this relief only applies to charities. If you aren’t eligible you may want to review your structure and which entity has the lease moving forward.

When it comes to charity shops, the sale of donated items qualifies for charitable purposes however bought-in goods do not, so you may need to split items into these categories to demonstrate your charitable activities.

Claiming discretionary rates relief

Local authorities can use their discretion to award further rate relief to charities. This sometimes includes:

• Issuing an extra 20% business rate relief to charities, thereby taking the total to a full 100% discount.
• Allowing non-profit and voluntary organisations who are not charities to claim business rates relief.

Each local authority has its own policy of awarding discretionary relief and you should contact them or check their website for further information. Sometimes your application for mandatory and discretionary rate relief can be made via one application form.

In your application to the local authority, you should seek to support your claim by including details of the value, support and services that you provide to the local area.

How can I claim mandatory or discretionary rates relief?

Most authorities have further details and application forms via their websites.

You can find your local authority and their website address by entering your property postcode via the GOV.UK website here.

For some local authorities a new application will need to be submitted every 12 months, and the decision usually takes around 4 weeks from all the information being received.

Some local authorities will also ask for evidence to support applications.

Other considerations

• Does your charity have a vacant property? Vacant properties owned by charities are entitled to full relief, as long as the next use of the property is expected to be for charitable purposes. However, should these vacant properties be used for non-chairtable purposes such as lettings or other activities, business rates may become fully payable.
• Not been able to claim the full 100% discount on your business rates? If your local authority isn’t issuing discretionary relief to top up the mandatory charitable rate relief to a 100% discount it is often worth reviewing rateable values with qualified surveyors to see if cost savings can be made.
• Not claimed charitable rate relief in previous years? Usually, mandatory relief claims can be back-dated for up to 6 years. However discretionary rates relief claims can usually not be back-dated, but you should check with your local authority.
• Been contacted by a firm who claims they can reclaim your business rates? There are many firms offering to handle business rates claims, sometimes taking a percentage of the claim in fees. As described above, the process to apply for charitable business rates relief with local authorities is usually straight-forward and if you need help with reviewing your rateable value, we would suggest selecting a reputable firm of qualified chartered surveyors.