Charities miss out on millions in discretionary rate relief

Charities benefited from £43m in discretionary business rates relief in the financial year to March 2014, it has been revealed.

But while this seems a large amount, this was out of a potential £349m.

Charities received almost £1.4bn in mandatory rate relief, according to the figures, published by the Department for Communities and Local Government.

Good causes are expected to receive £44m in discretionary relief on business rates out of a potential £355m in 2014/15, the latest government figures show

Currently charities can claim up to 80 per cent of the tax back as mandatory relief on buildings that are used for charitable purposes. Local councils can then provide discretionary relief of up to 20 per cent.

Michael Birtwistle, senior policy officer at National Council for Voluntary Organisations, said: “It’s evidently disappointing that local authorities are on average only providing around 12.5 per cent of the discretionary relief they’re able to for charities, but it reflects the difficult funding environment for local government, and practice varies greatly across different areas.

“Changes in the way reliefs were measured and reported between 2012/13 and 2013/14 mean it’s difficult to establish what the trends in the granting of discretionary relief have been, but in response to our survey earlier in the year, several members reported being told by their local authorities that their discretionary relief would be under review from next April.”

The government has begun a review of business rates to tackle potential abuse of the system.

Four sector bodies, the Charity Finance Group, Charity Tax Group, Institute of Fundraising and NCVO submitted a joint response urging the government to scrap the 20 per cent discretionary rate and increase the mandatory rate to 100 per cent from central government.

There have been signs that councils are becoming less generous with this discretionary element.

Last year, Calderdale Borough Council in West Yorkshire approved plans to end discretionary rate relief for national charities that operate shops in its area in order to make savings of £50,000.

This year Pembrokeshire County Council in Wales consulted on the same move.

To find out how to claim for rate relief, contact us today.

Posted in Charity News.