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Charitable Exemption for rates

Guide

Charitable Exemption can apply where a property is occupied by a charity and where the actual use of the premises is dedicated to the charitable objectives of that charity.

Being a charity does not necessarily mean you are entitled to exemption from rates. Both parts of the paragraph above require to be fulfilled before an exemption can apply, this means that LPS will require proof of (a) who is in occupation and (b) what activities are taking place within the premises.

This is a complicated subject and charities should ensure they have sought professional advice in relation to the implications of renting premises. It should not be assumed that exemption will apply simply because the premises are occupied by a charity.

Eligibility criteria for Charitable Exemption

Charitable purposes include formally constituted trusts for:

the advancement of religion
the advancement of education
the relief of poverty
other purposes beneficial to the community

If you wish to seek Charitable Exemption for a property you must show that it is either a charity, or alternatively that it is not established for profit, and that the use of the premises directly facilitates the charitable objectives.

See below examples where exemption can apply.

A church

A simple example is a church, which is held by trustees whose main objects are the advancement of religion, and the church building is used in connection with these objects.

A property used for recreational purposes

The use of 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. A village hall or recreation centre often falls into this category.

Charity shop

A charity shop would not have to pay rates if they sell only donated goods. However, if they also sell goods bought wholesale the rateable valuation of the property will be apportioned on the basis of the respective turnover of donated and wholesale goods.

Examples where exemption will not apply

Storage

Where the entire property is only used to store items that may be used in connection with the charitable objectives. Storage is not a charitable objective in itself, and therefore exemption cannot apply.

Vacant property

Where a charity has an agreement to make use of premises but has not yet taken up occupation. The period during which a property is being fitted out or is being held pending occupation is not in actual use for the charitable objectives. This timeframe may require rates to be paid until actual occupation and the eligibility criteria are proven to apply.

Property in shared use with other commercial activities

Where part of a property is occupied by a charity carrying out its charitable objectives and part is used by a person or company running a commercial business those parts identified as being a commercial business will be liable to pay rates. Therefore, either party should advise LPS if such circumstances occur in order to ensure appropriate rating liability is being applied to the correct occupiers.

Property partly occupied by a charity

Where a charity has taken up occupation of a large property but only uses part of the premises, the vacant parts are not being used for the charitable objectives, so those areas cannot fulfil the eligibility criteria. The vacant parts may be apportioned and will attract commercial business rates payable by the occupier - usually the charity.

How to apply

The application process is in two stages. The first stage is you need to make the application and the second stage is you must fill in a questionnaire.

Stage 1: Apply online for a non-domestic valuation review

When applying online select the following option: I wish to apply for a rate exemption or relief; The property or occupier is exempt from rates.

Or you can also apply by post or email (PDF, 230K).

Stage 2 : Complete questionnaire

You will receive a confirmation email that contains a link to a questionnaire. This questionnaire must be completed and returned within two weeks of the date on which you submitted your application for a valuation review.

If you submitted your application via post and did not provide an email address then you will receive the questionnaire by post.

To complete the questionnaire you will need:

Your valuation review reference number (this can be found on your confirmation email)
Details of the property and organisation/charity including NI Charity Commission Registration Number (if applicable) and HMRC Registration Number (if applicable)
Percentage of goods sold that are donated and percentage that are purchased for resale
You may also need to provide supporting documents including:
- A copy of your constitution/ memorandum and articles of association/trust deed
- A copy of HMRC letter confirming recognition as a charity
- A copy of the latest accounts or recently signed treasurer’s report
- A copy of the current lease or tenancy agreement

Charitable Exemption for business rates is a complicated subject and it may be advisable to seek independent professional advice. Choose a solicitor for your business.