Business rates are levied on parties that occupy premises and use a rateable hereditament. The question of who occupies, what is occupied and how the property is used can all be material issues, as can the question of whether the use is charitable or not.
- Charities are entitled to 80% mandatory business rate relief, but only if they occupy an identifiable “hereditament” and use the property wholly or mainly for charitable purposes. Discretionary business rate relief of up to 100% may be available to charities on application.
- If the boundaries of the area that a charity occupies are not clearly defined, it may be that the Local Authority rates’ department will resist any argument that it is a rateable hereditament.
- Buildings registered for public religious worship under The Places of Worship Registration Act 1855 (and possibly other places of worship) or church halls are entirely exempt from business rates.
- Additional discretionary relief for charity up to 100% may also be available.
- Empty buildings are exempt from relief for three months but where the building is owned by a charity, and it appears that when the property is re-occupied it will be wholly or mainly used for charitable purposes (whether of that charity, or other charities) this time limit does not apply.
- The Charity Commission has been greatly concerned at apparent abuses of this relief and have issued guidance on their view of the appropriate and inappropriate use of tax reliefs by charities, including business rate relief. Comment and guidance is available on their website.