Specific situations for charity rates relief

person in a head covering looking at camera with people packing boxes in background

Historic Houses

In Hoare & Anor v National Trust [1998] EWCA Civ 1525 it was held that two loss-making historic homes could have a nil assessment for non-domestic rates. The reason given for this was that the costs of maintenance and repair could deter a potential tenant.

Trading subsidiaries

Premises occupied by a trading subsidiary will not be eligible for mandatory rate relief, but some local councils are willing to grant a discretionary relief.

Where parts of premises are occupied by both the charity itself and a trading subsidiary, only the part occupied by the charity qualifies for mandatory relief, although in practice some local councils accept an argument that the charity is occupying the whole premises and using them mainly for charitable purposes.

Charity shops

If a charity shop is wholly or mainly used for the sale of goods donated to a charity and the proceeds of sale of the goods are applied for the purposes of a charity, then the property will be treated as wholly or mainly used for charitable purposes.

Where the shops sell a mixture of donated and bought goods, the charity would need to look at the proportion of donated goods as against bought goods and keep on the right side of the ‘mainly used for the sale of goods donated to the charity’ test.

Shops run by trading subsidiaries of charities are not eligible for mandatory rate relief but some local councils are willing to grant a discretionary relief.

Lettings for charitable purposes

Charities are not entitled to relief for properties let on normal commercial terms. If the property is let for a charitable purpose, then the case is different.

Property Used for Disabled Persons

There is an exemption for property used for disabled persons. The legislation sets out four circumstances where the exemption applies:

Property must be used wholly for:

the provision of facilities for training, or keeping suitably occupied, persons who are disabled or who are or have been suffering from illness;
the provision of welfare services for disabled persons;
the provision of facilities under section 15 of the Disabled Persons (Employment) Act 1944;
the provision of a workshop or of other facilities under section 3(1) of the Disabled Persons (Employment) Act 1958.

A person is disabled if they have a disability within the meaning given by section 6 of the Equality Act 2010. “Illness” has the meaning given by section 275 of the National Health Service Act 2006].

“Welfare services for disabled persons” means services or facilities (by whomsoever provided) of a kind which a local authority in England had power to provide under section 29 of the National Assistance Act 1948 before it ceased to apply to local authorities in England.

Places of Religious Worship

The categories of property, subject to specified requirements, are exempt from business rates:

Churches, chapels and other places of public religious worship
Church halls, chapel halls and similar buildings
Ancillary administrative premises

A place of public religious workshop was previously to be taken as meaning places to which people come to do reverence to or for the veneration of God (not solely the Christian God). R v Register General, ex parte Segerdal and Church of Scientology of California [1970] RA 439.

However, this has been superseded by the Supreme Court decision in R (on the application of Hodkin and another) v Registrar General of Births, Deaths and Marriages [2013] UKSC 77, [2013] All ER (D) 100. This decision recognises that religious worship or belief does no longer have to venerate a supreme deity. However, a ceremony of instruction or discussion of a philosophy is not religious worship.

In addition, in order to qualify for the exemption, the building must be a place of public worship. It has been held that Mormon temples do not qualify for the exemption because they are not open to the public at large but only to Mormons in good standing: see Church of Jesus Christ of Latter-Day Saints v Henning (VO) [1964] AC 420 and Gallagher (VO) v Church of Jesus Christ of Latter-Day Saints [2008] UKHL 56 (30 July 2008). This test was also considered in the more recent case of Church of Scientology Religious Exemption College Inc v Ricketts (VO) [2023] UKUT 1 (LC).

In the case of chapels in schools, colleges, or convents, provided members of the public can attend services, then the chapel will be exempt from business rates, providing that it is certified as a place of religious worship. Where the public is not allowed to attend services, the exemption will not apply.

Empty properties

Empty property relief is normally available for 3 months, but this is extended for properties owned by charities if the next use will be mainly for charitable purposes.

Once factories and warehouses have been empty for six months, and other commercial property, for three months, full rates become payable. This includes investment properties owned by charities which are not in use by the charity.

CTG does not provide tax advice and so the information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future.