Business rates will offer no relief for some charities

9th August 2018

Charities receive mandatory business rate relief of 80%, but a further discretionary relief of 20% depends on the decision of the relevant Local Authority. However the Charity Retail Association (CRA) report published in April, revealed inconsistent and unfair policies on business rates relief and waste management by local councils.

The CRA found that 51% of local authorities said they did not offer full discretionary business rates relief to any charity shops in their area. In fact 42% offer no additional rate relief at all to shops in their area.

The CRA advocates that it would be “simpler, fairer and more cost-effective to move to a mandatory system of 100% rate relief for all charity shops, recognising the wide social benefits and enabling them to do more for good causes across the country.”

As a result of these potential relief cuts, many charities which have shops and trading subsidiaries are having to consider restructuring their entire organisations, devoting time and resources to conducting strategic reviews to look at the impact that a reduction in business rate relief would have, and ultimately whether it is effective to continue trading activities.

The CRA report also showed that a majority of authorities offer a free service for charity shop household waste, but 19% of 205 authorities said that they did not accept charity shop waste; while 18% said they only accepted it at some sites or on certain days.

Of 171 authorities that do accept waste from charity shops, 28 imposed a levy and 26 partially charged.

Impact on charities

The overall impact of this remains to be seen. Much will depend on the Local Authority in which a charity operates as to whether it will continue to receive full business rates relief or a significantly reduced award.

We have advised a number of charities with retail operations on re-structuring their trading operations recently and consider it is likely to be an ongoing area of concern for charities with charity shops and trading subsidiaries.

If you would like support or advice on restructuring in light of potential business rates changes, please contact either Kirsty McEwen or Ellie Williams.


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