Charities’ new business rates bill will be double that of 2010, says CFG

The Charity Finance Group (CFG) has suggested that charities’ business rates bill will be in excess of £432 million after April’s revaluation – more than double what charities paid in 2010.

The rates, which totalled just £210 million seven years ago, are based off the rental value of commercial properties.

The CFG said charities are predicted to pay £348 million in 2016/17, £391 million in 2017/18, and £432 million in 2018/19.

Charities currently receive an 80 per cent mandatory relief on business rates on property occupied for charitable activity, while an extra 20 per cent relief can be awarded at the discretion of local councils.

However, in a letter to Chancellor Philip Hammond, the CFG called for charities to be entitled to 100 per cent mandatory relief.

It said that charities in economically deprived areas are more affected because “those councils which operate in areas of economic disadvantage and have a weaker tax base are least able to give discretionary rate relief”.

Likewise, Andrew O’Brien, head of policy and engagement at the Charity Finance Group, said: “There is a perception among the public that charities are tax-free. This is simply not the case. Although we do receive support towards paying business rates, many charities are still paying substantial amounts.

“This, alongside taxes such as IPT and irrecoverable VAT, should be seen as indirect taxes on people’s donations because it means that there is less money left over to help beneficiaries. It is time to correct this anomaly and create a simpler system that will see charitable resources flowing to where they should go, furthering charitable objectives.”

Any changes to charity business rates are likely to be announced in this year’s Spring Budget, 8 March.