Charity paying higher business rates than a business!

emv

Does anyone know whether a charity can claim small business rates relief? I am the trustee of a charity which rents a building with a rateable value of £1250. As a small business, we would be eligible for small business rates relief and pay nothing until 2017. As a charity, we receive 80% relief and some discretionary relief but still have a rates bill to pay. The local council have said they can only apply charitable relief and we must pay even though as a small business we wouldn't. Is this right?

antrobus

emv wrote: »

Does anyone know whether a charity can claim small business rates relief? I am the trustee of a charity which rents a building with a rateable value of £1250. As a small business, we would be eligible for small business rates relief and pay nothing until 2017. As a charity, we receive 80% relief and some discretionary relief but still have a rates bill to pay. The local council have said they can only apply charitable relief and we must pay even though as a small business we wouldn't. Is this right?

In order to qualify for mandatory 80% charitable relief for rates, then the property must be wholly or mainly used for charitable purposes. (Or some such malarkey.) If the property is being used for charitable purposes, then it's not being used for business purposes, now is it?

What are you using the property for?

emv

It's a youth club so entirely charitable, it's just annoying to have to pay more as a charity. I though charities could claim small business rates relief instead of the charitable relief.

Savvy_Sue

I thought the small biz rates relief just deferred the rates until a later year? Or is that something else?

We (small charity) decided against deferring payment.

antrobus

Savvy_Sue wrote: »

I thought the small biz rates relief just deferred the rates until a later year? Or is that something else?

We (small charity) decided against deferring payment.

No, there is a specific small business rates relief scheme that (temporarily I think) gives you 100% relief for properties with a rateable value of £6,000 or less.

https://www.gov.uk/apply-for-business-rate-relief/small-business-rate-relief

As far as I'm aware you can only claim one kind of rate relief.

emv

It makes sense to only claim one kind of relief but I'd prefer to swap & claim the relief that means we pay nothing!

Pennywise

emv wrote: »

It makes sense to only claim one kind of relief but I'd prefer to swap & claim the relief that means we pay nothing!

If you're not a business, then you're not eligible to claim business rates relief.

I'm sure there are lots of businesses that would like to claim reliefs that are only available for charities.

koru

Pennywise wrote: »

If you're not a business, then you're not eligible to claim business rates relief.

Are you saying that because you know it is correct or because you consider it to be common sense?

I can see why you might suppose that Small Business Rate Relief would only be available for businesses, but is that actually what the legislation says? The legislation in question is section 43(4A) Local Government Finance Act 1988. As far as I can see, there's no test in it restricting the relief to for-profit businesses; it seems to apply to anyone who is paying non-domestic rates. Most payers of this will be businesses, which may be why the relief is named as it is, but charities also pay non-domestic rates.

The 80% reduction for charities is section 43(5) Local Government Finance Act 1988. I can see nothing in 4A or 5 to say that if 5 applies, 4A doesn't.

So, it might be worth going back to your council and asking them on what grounds in the wording of the legislation they are turning you down. Both reliefs seem to apply, so on what grounds do they think they have the power to chose that you only get the less-beneficial one?

But I'm just going by what the legislation seems to say and I might be missing something.

koru

antrobus wrote: »

No, there is a specific small business rates relief scheme that (temporarily I think) gives you 100% relief for properties with a rateable value of £6,000 or less.

In the budget the Chancellor announced that the RV limit for this relief will be increased to £12,000 (with taper relief for up to £15,000) from April 2017.