Infrastructure bodies including NCVO and the Charity Finance Group are consulting charities over a government review of business rates which could potentially affect sector tax reliefs.

Business rate reliefs are worth more than £1.5bn to the charity sector – the single most valuable tax relief the sector receives. Charities receive 80 per cent mandatory relief on all business rates, with the other 20 per cent at the discretion of the local authority.

In its review of business rates the government has given an indication it does not expect the review to impact rate relief for charities but infrastructure bodies remain concerned about several aspects of rate relief and have asked charities to fill out a survey to help gather more information.

The survey is jointly conducted by NCVO, CFG, the Charity Tax Group, the Institute of Fundraising and the Charity Retail Association.

“The government recognises that some sectors, such as farming and charities, play an important part in the community,” the government review document says. “The government does not intend to increase business rates for those most deserving of relief or exemption and it wants to consider carefully the impacts of any change. It therefore welcomes evidence and analysis to support its decision-making.”

However umbrella bodies have expressed concerns over the potential negative impact of some proposals, but have also said the review is an opportunity to persuade government to make beneficial changes.

Andrew O’Brien, head of policy and public affairs at CFG (pictured), said there were concerns over the “unforeseen effect” of business rate changes at a local level. CFG has published a briefing paper to outline the issues involved.

Local authorities now retain more of the rates they collect locally, under a system known as the Business Rate Retention Scheme, and this has impacted on their tendency to give rate relief to local charities. Charities have also become the focus of discussions after rate relief was used for tax avoidance by landlords with empty properties.

Michael Birtwistle, a senior policy officer at NCVO, said the phrase “the most deserving” in the government review was open to question.

“A cautiously optimistic interpretation is that regardless of the changes the government makes to business rates more widely, it doesn’t intend to change the reliefs available to charities,” he said. “A less generous approach might question what is meant by ‘the most deserving’; is this the whole sector or some politically-divined subsection?

“NCVO will be clearly articulating the value that the relief represents for the sector as a whole, and the value that this lets charities add to their local communities.”