Governance, legal and compliance Charity finance policy

A stairway to heaven on business rates for the charity sector?

Now that it has been a week since the Chancellor submitted his Autumn Budget, CFG has been able to take a finer look at what the document says on business rates.

One positive outcome that we have not previously reported on is a change to the “staircase tax”. In 2015 the Supreme Court ruled on redefining single business space and meant that the government’s Valuation Office Agency (VOA) could allocate different business rates for individual floors and workspaces that are only linked by public areas. Offices which had one office linked by a communal lift, corridors or stairs were being charged as separate offices, even if all the rooms were part of one business. This has been duped the “staircase tax” and is predicted by the Federation of Small Businesses (FSB) to affect 80,000 properties across the UK.

So what does the Budget say and do?

The Budget states: “legislating retrospectively to address the so-called “staircase tax”. Affected businesses will be able to ask the Valuation Office Agency (VOA) to recalculate valuations so that bills are based on previous practice backdated to April 2010 – including those who lost Small Business Rate Relief as a result of the Court judgement. The government will publish draft legislation shortly”. This is good news and will mean that charities that have been affected by the 2015 ruling could see a significant decrease in their business rates bills.

Another key announcement

The Budget on business rates is the increasing frequency that the VOA will use to revalue non-domestic properties. The revaluations will begin every three years, with the next one currently due in 2022. However, this could result in an administrative burden for charities as they will have to be responsible for proving regulation information to the VOA, including property characteristics, use and rent. The government says in the Budget that they will be launching a consultation on this in spring 2018. It’s important that the government is addressing business rates, though CFG is still concerned that there has been no confirmation of a 100% business rate relief for all charities. CFG has predicted that the charity sector’s expenditure on business rates could hit over £400m by 2020.

This post was last reviewed on 27 February 2019 at 16:46
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