CHAPTER 2
Summary2.1 The main provision conferring the discretionary power on billing authorities to grant rate relief is Section 47 of the Local Government Finance Act 1988. Under this provision billing authorities have discretion to grant rate relief to certain ratepayers from all or part of the amount of non-domestic rates payable and the level of relief determined by an authority may be varied by a further determination. The Non-Domestic Rating (Discretionary Relief) Regulations 1989 (SI 1989 No. 1059) allow billing authorities to restrict discretionary relief under section 47 to a fixed period, and deal with the notice which must be given if that relief is varied or revoked. There is no statutory requirement for organisations to submit written applications for relief (Chapter 3).
2.2 Billing authorities should first consider whether an institution or organisation applying for rate relief is eligible for mandatory rate relief. This relief is fully centrally funded. Generally, properties used wholly or mainly for charitable purposes are eligible for 80% mandatory relief. This relief can be topped up to 100% at the discretion of the billing authority and the top-up benefits from 25% central government funding (Chapter 4).
2.3 Where mandatory rate relief is not available, authorities can consider the award of discretionary rate relief. Authorities have discretion to grant relief of up to 100% to certain non-profit making bodies. Billing authorities also have discretion to grant relief of up to 100% to ratepayers who are experiencing hardship (under section 49). 75% of the cost of all discretionary reliefs (including hardship relief) is met centrally, with the billing authority meeting the remaining 25% (Chapter 4).
2.4 The existing mandatory relief scheme for charities (section 43(5)) applies equally to any sports organisation that is a charity. Sports organisations that are charities and use their premises wholly or mainly for charitable purposes are entitled to 80% mandatory rate relief. In considering applications for discretionary relief from non-profit making sports clubs that do not have charitable status, authorities may wish to take into account the criteria suggested (Chapter 5).
2.5 Charity shops can receive rate relief if they are wholly or mainly used for the sale of goods donated to a charity and the proceeds of the sale are applied for the purposes of a charity (section 64(10)). General guidance for determining eligibility for rate relief of charity shops is provided in chapter 6. Guidance is also provided on Friendly and Industrial and Provident Societies and their eligibility rate relief. Charities may also be excepted or exempt from registration with the Charity Commission and this is also explained in chapter 6. An organisation that has had its application for registration as a charity refused by the Charity Commissioners can still be considered for rate relief (Chapter 6).
2.6 Billing authorities have the discretion to award rate relief of up to 100% on the grounds of hardship (section 49). General guidance is provided here with some additional factors that authorities should bear in mind when considering applications (Chapter 7).
2.7 Unoccupied properties enjoy a rate free period of three months (Non-Domestic Rating (Unoccupied Property) Regulations 1989 (SI 1989/2261)). After that, they are liable to pay 50% of the normal rates bill (section 45). Certain types of property are exempt from empty property rates. Examples include listed buildings and industrial properties. Billing authorities may grant relief where part of a property becomes unoccupied for a short time only (section 44A). Where an authority proposes to exercise its discretion in these circumstances it should seek an apportionment of the Rateable Value from the Valuation Officer (Chapter 8).
2.8 Relief from taxes, including non-domestic rates, can constitute state aid under European Union legislation. There is a block exemption from the state aid rules where the aid is below a de minimis level. The de minimis level applies to all de minimis aid received by a particular undertaking, including other Government subsidies or grants, in addition to any rate relief given as de minimis aid. This is €100,000 (approximately £63,000) over a three year period below which any aid is allowable. This rule does not apply in certain sectors including transport, agriculture, fisheries, coal and steel. Billing authorities should bear this in mind when granting discretionary rate reliefs. Any relief exceeding the de minimis threshold, or of any amount for businesses in the sectors where the threshold does not apply, may need to be notified to the European Commission. Billing authorities should contact ODPM if there are any queries about state aid (Chapter 9).
2.9 Chapter 10 provides general guidance to authorities on the need to keep ratepayers informed about their decisions on applications for discretionary rate relief. This includes procedures, acknowledgements, notifications to successful and unsuccessful applications, and the right of appeal against a decision to reject or restrict the award of discretionary rate relief.
2.10 Annex A contains the definition of a Community Amateur Sports Club (CASC) as set out in schedule 18 of the Finance Act 2001.
2.11 The table at Annex B summarises the property which is eligible for rate relief, the type and amount of relief that is available and the financial implications.
Published 5 December 2002
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