Consequences of business rates changes for charities

Published on: 7th April 2016

Robert Brown, partner in our rating department and president of the Rating Surveyors Association commented:

"In George Osborne's March Budget there was seemingly welcome news for charities with the 80% business rates relief that they currently benefit from remaining unchanged.

However there are potential consequences of the chancellor's proposed business rates changes that may adversely affect charities when they come into effect next April. George Osborne announced that around 600,000 small businesses would pay no business rates as he raised the threshold at which small business rates relief applies from a rateable value of £6,000 to £15,000.

In what we can only imagine is an undesirable side effect this may lead to small businesses that qualify for 100% small business rates relief, trading right next door to a charity that will still be required to pay 20% of their business rates bill.

The move to increase thresholds and permanently double small business rates relief means that local authorities stand to lose £1.4bn a year.

There is also the opportunity for charities to receive discretionary relief on the final 20% of their rates bill; this is provided by local councils in order to support those charities needing extra help. The changes discussed will likewise lead to a further squeeze on this relief currently available to charities as councils attempt to cope with the further financial pressure.

This is yet another example of why the Chancellor should consult business rates experts before implementing changes."

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