Review of non-domestic rates in Northern Ireland

In May 2019, the Department of Finance announced a review of the non-domestic rating system in Northern Ireland. A consultation on a “full and comprehensive review” of business rates was published in September 2019.

The outcome of the review was published in November 2022. Due to the NI Assembly not sitting no recommendations will be taken forward, but it was interesting to read both the support for the exemption from the sector, but also reservations about its impact on other parts of the retail sector.

Charities currently benefit from an exemption from rates in Northern Ireland (which is different to the treatment in England, Scotland and Wales where there is 80% mandatory relief) – see below for full details. The cost of exemption (primarily for charities) is estimated at £96.2m per annum.

The consultation closed on 11 November 2019. CTG’s response to the consultation highlighted the importance of the exemption and called for it retention. This followed close liaison with the Charity Retail Association and charities based in Northern Ireland.

CTG response Northern Ireland business rates consultation

The consultation questions included:

  • How can revenues from district and regional rates be raised in a way that is fair and equitable and without placing an unacceptable burden on business ratepayers?
  • What ways can be found to widen the tax base that could facilitate a lower level of business rates?
  • How can a fair distribution between district rates and regional rates be sustained?
  • How can a fair distribution between non-domestic and domestic rates be sustained?
  • What reliefs and supports are necessary and might be introduced, changed or ended, targeted in line with Executive priorities and recognising ability to pay?
  • What alternative taxation options should be considered to complement or partially replace property based non-domestic rates and to allow for lower levels of revenue from business rates?

The parameters for this Review were as follows:

  • Whatever options or proposals are explored must result in similar levels of revenue being raised overall for the NI Executive and local government as by the current rating system
  • It should seek to explore the possibilities of widening the tax base and lowering the tax rate (poundage)
  • It will not seek to abolish non-domestic rates – a substantial portion of the revenue will continue to be raised from a tax that is levied against the value of property
  • It will examine alternative taxation options that may complement or perhaps partially replace non-domestic rates
  • It will consider how non-domestic rating aligns with the outcomes of the Programme for Government and the strategic objectives of relevant economic, social and environment policies
  • It will consider equity within the rating system and whether it can be made fairer and more closely linked to ability to pay. This will include an examination of all existing reliefs and exemptions to determine whether they remain appropriate and balanced between domestic and non-domestic rates at district and regional level
  • It will examine the UK government’s policy proposals in relation to ‘Making Tax Digital’ which is a key part of the government’s plans to make it easier for individuals and businesses to get their tax right. These future proposals, where they relate to business rates, will be considered
  • It will examine aspects of the domestic rating system and how it operates in relation to the non-domestic system
  • It will examine policies and processes for raising local revenue operating
    nationally and internationally.

All options that will be presented will also be fully costed so that the full resource implications of any change will be known. Furthermore, an integrated impact assessment will be carried out, which can be updated as and when further impacts become known. When the Review is completed, the outcome and recommendations will be presented to the Executive and decisions sought as appropriate.

There have been a number of consultations in recent years on rates relief in Northern Ireland with the charity exemption facing scrutiny, but remaining unchanged following opposition from charities. See below for more background:

Description of principal non-domestic reliefs in Northern Ireland

Charitable Exemption

If a property is, occupied and used for public benefit or for charitable purposes it is exempt from rates. This includes formally constituted trusts for:

  • the advancement of religion;
  • the advancement of education;
  • the relief of poverty; and
  • other purposes beneficial to the community,

However, this only applies if the organisation occupying the property is not established or conducted for profit, and that the use of the premises directly facilitates the charitable objectives e.g. a church, that is held by trustees whose main objects are, the advancement of religion, and the church building is used in connection with these objects. The use of the premises for recreation or other leisure time occupation may also be considered to be charitable if the facilities are provided in the interests of social welfare and are for the public benefit.

The use of premises as a charity shop will attract exemption if the charity sells goods that are wholly donated; however, if they also sell bought in goods the valuation of the property will be apportioned between the two uses.

Sport and Recreation Relief

Rate relief is available for premises that meet all of the following

  • occupied for the purpose of a prescribed recreation;
  • occupied by a not-for-proft club or society; and
  • the club or society does not employ any person to engage in any recreation for reward.

Rate relief is provided at a reduction of the normal rate by 80% due on qualifying facilities. In other words, that part of the property which is used solely for the recreation. Areas not used solely for the prescribed recreation are excluded from the relief. Where Community Amateur Sports Clubs (CASCs) do not have a full licence to sell alcohol, the maximum relief available on qualifying Sport & Recreation areas within the club premises is enhanced from 80% to 100%.