Business rates – Property wholly or mainly used for charitable purposes

Charity ratepayers are granted a mandatory 80 per cent relief from non-domestic rates where the property is wholly or mainly used for charitable purposes by that charity or by that charity and other charities. They do not need to be a registered charity in order to claim the relief, but must be able to show that they are established for charitable purposes. A distinction is drawn so as to exclude from relief use for the purpose of getting in, raising or earning money for the charity.

In order to benefit from the mandatory exemption from business rates it is important to understand the meaning of ‘wholly or mainly used for charitable purposes’. Case law suggests that ‘mainly’ probably means ‘more than half’; but there is a certain amount of ambiguity about this and the interpretation may vary from local authority to local authority.

It is sometimes argued that ‘mainly’ in fact means more than 75 per cent. Charities may have to try to negotiate this with their local authority. Although not a case involving rates it may be useful to quote Fawcett Properties Ltd v Buckingham County Council [1961] AC 636, where mainly is deemed to mean ‘more than half’.

The degree of occupation required has been considered in recent years, in the context of business rates ‘planning’. In Kenya Aid Programme v Sheffield City Council [2013] EWHC 54 (Admin), it was made clear that ‘mere occupation’ by a charity was insufficient to allow it to be able to claim the mandatory relief, but that the test does not require an assessment of whether the charity had a operational need for its occupation of the premises, nor whether it was using space effectively (in that case, the storage of furniture).

In Public Safety Charitable Trust v Milton Keynes Council [2013] EWHC 1237 (Admin), it was also made clear that ‘mere occupation’ was insufficient, but it was also held that the use of the building should be ‘substantially and in real terms for the public benefit’ (which, in that case, the provision of free wireless Internet access was not).

A head office and property used for management and administration would be sufficient to qualify, but not a property carrying on business to earn money for a charity. Where a charity rents out its property, it is not used for charitable purposes unless it is renting out its property to fulfil its charitable purposes.

 

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