Can my charity shop have business rates relief?

Charities are entitled to mandatory rates relief of 80% of any business rates payable but it is only available when the charity is the rate payer (so usually the leaseholder), and the property is mainly used for charitable purposes. Local authorities can provide discretionary rates relief of up to 100%. This will depend on the local policy on granting discretionary rates relief. This can also be available to cover the remaining 20% payable by a charity.

If the charity’s trading subsidiary rents and operates the shop, mandatory rates relief should not be claimed. However, if the charity rents the shop and sells donated goods, the subsidiary can sell any bought in goods and operate the Retail Gift Aid Scheme to raise donations for the charity. Where the subsidiary’s activities are less than 50% the charity can still claim mandatory rates relief. The way the split is calculated is up to each local authority.

Want to discuss further?

Helen Elliott

Partner

Ross Palmer

Senior Tax Manager

Gillian McKay

Senior Tax Manager

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