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Changes to business rates for charities in Wales

Published : 27/11/23 | Categories: Information & support | News |

A new bill introduced in the Senedd will mean stronger eligibility conditions for charitable relief for unoccupied properties.

On 20 November, the Local Government Finance (Wales) Bill was introduced in the Senedd. The Bill will deliver most of the proposed reform for non-domestic rates (the business rates charged on properties such as shops, offices and warehouses) set out last year in Welsh Government’s consultation on non-domestic rates reform.

These proposals include more frequent revaluations and measures required to deliver them, as well as wider improvements to enable Welsh Government to better adapt the non-domestic rates system to meet the needs of Wales.

WHAT WILL CHANGE?

In relation to non-domestic rates, the Bill will:

  • increase the frequency of revaluations to three-yearly
  • enable the revaluation cycle to be altered using regulations
  • change the way ratepayers provide information to the Valuation Office Agency (VOA), to ensure more frequent revaluations are sustainable in the long-term
  • enable Welsh Government to confer, vary or withdraw reliefs and exemptions, and to prescribe differential multipliers, using regulations
  • strengthen the eligibility conditions for charitable relief for unoccupied properties
  • remove a timing restriction on the awarding of discretionary relief by local authorities
  • expand the definition of a new building for the purpose of the serving of completion notices by local authorities, and
  • enable the counteraction of advantages arising from artificial avoidance arrangements specified in regulations

CHARITABLE RELIEF FOR UNOCCUPIED PROPERTIES

Legislation currently permits a charity or trustee of a charity who owns or leases an unoccupied property to seek full relief from rates indefinitely if it appears that, when next in use, the property will be used for charitable purposes. If the property is not actually used for a charitable purpose in the future, the owner or leaseholder will have benefitted from these arrangements while it was empty.

The arrangement has, therefore, been exploited as a method of non-domestic rates avoidance. To enable the system to continue to support cases making legitimate use of the relief, the Local Government Finance (Wales) Bill will introduce additional eligibility conditions.

NEW CONDITIONS FOR ELIGIBILITY

Billing authorities will apply relief where they are satisfied that the property is unoccupied for a reason related to the charitable purposes of that charity and the next use of the property will be wholly or mainly for charitable purposes. This will enable billing authorities to look beyond the charitable status of an organisation and consider whether the aims of the charity, its intended use of the property, and the reason why it is unoccupied are compatible.

Ratepayers will be required to provide additional evidence in these circumstances, providing evidence in relation to these conditions will not place a disproportionate administrative burden on genuine ratepayers who are eligible for the relief. Charities will already be aware of the requirements placed on them by charity law to prepare accounts and annual reports and they will merely be required to evidence their compliance.

RELIEF FOR OCCUPIED CHARITIES

This issue is separate from the mandatory provision of relief for a property occupied by a charity. The Local Government Finance (Wales) Bill will not change the existing arrangements for charitable relief for occupied properties.

Further information about non-domestic rates can be found on Business Wales at: businesswales.gov.wales/topics-and-guidance/business-tax-rates-and-premises/business-rates-wales

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