Local authorities are increasingly "unfairly challenging" charities’ business rate relief, the Charity Tax Group (CTG) has said.
The CTG, which campaigns for a better deal for charities on tax, said in a Budget submission to the Treasury that it was concerned by councils’ response to new rules which resulted in rates being shared between local and central government.
Charities are entitled to claim mandatory relief on 80 per cent of their business rate bill, and councils can grant a discretionary relief on the other 20 per cent. Reliefs are worth £1.63bn a year to charities, but the CTG warned they are increasingly under threat.
“Local authorities are taking an increasingly hard line and are unfairly challenging charities’ mandatory relief,” the CTG said. “Discretionary relief continues to be squeezed with far fewer charities now benefiting from it.”
The CTG said it was concerned by proposals to cut rate relief for charity shops in Wales, and was pleased the Welsh government had not pressed ahead with this.
“We welcomed assurances from then Economic Secretary to the Treasury, Sajid Javid MP, that there were no plans to review the current mandatory rate relief for charities in England, but would call on the government to make a public commitment to this effect to reassure charities and end the uncertainty on this issue,” the CTG said.
This month, Calderdale Borough Council in West Yorkshire approved plans to stop discretionary rate relief for national charities which have shops in its area in order to make savings of £50,000.
Gift Aid Small Donations Scheme less popular than expected
The CTG also warned that the Gift Aid Small Donations Scheme is likely to be much less popular than government projections suggested.
The GASDS, introduced last year in the Small Charitable Donations Act, allows charities to claim a gift aid-like relief on small cash donations of up to £5,000 a year, even without individual paperwork.
It came into force in April, and the government projected it would raise £50m for charities in the first year, but the CTG said as of January 2014, it had raised just £3.5m.
It said it now “seems very unlikely” that the government’s projection would be met.
“The government needs to continue to work with charities to improve the guidance available. This is particularly important in relation to the more complex elements of the scheme such as the connected charities rules and the eligibility of charities for the community buildings provision.
“Given the inexorable move to cashless and contactless payments, it would be helpful if the government gave further consideration to its current policy that the GASDS will apply to cash payments only.
“This will no doubt be perfectly acceptable for the next two or three years – but payment habits might change quite radically after that.”
