Decision details

To approve and reject applications for discretionary rate relief from charities and other similar organisations

This report covers renewal applications for discretionary rate relief received since submission of the previous Cabinet Member Decision Notice for renewals. The recommendations are in line with the guidelines for charities and other similar organisations shown below.

Awards of discretionary relief are allowed under s47 Local Government Finance Act 1988 (as amended by the Local Government Act 2003) and the Local Government and Rating Act 1997 to the following rate payers:

·         Charities where the property in question is used wholly or mainly for charitable purposes;

·         Organisations not established or conducted for profit whose main objectives are, charitable or otherwise philanthropic, religious, concerned with education, social welfare, science, literature or the fine arts;

·         Clubs or societies not established or conducted for profit where the property is wholly or mainly used for the purposes of recreation.

·         Where the property is within the authorities Rural Settlement list, the rateable value of the property is less than £16,500 and the property is used for purposes that benefit the local community.

The organisations included within the appendices fall into one of the above categories.

Following the introduction of the business rates retention scheme on 1 April 2013, whereby councils are able to retain a proportion of business rates, the council is required to submit an annual declaration within statutory deadlines and forms part of the council’s formal budget process. The final calculation of business rates to be retained locally has several calculations including deducting an estimate for Discretionary Rate Relief before apportioning the councils local share of 49%. The council has estimated that £0.39m Discretionary Rate Relief will be awarded for 2017/18 following applications from businesses and organisations.

The value of the proposed relief at Appendix A for the 2017/18 financial year is £17,324.81 and is in line with the original estimate. Any over or under estimate will be adjusted for accordingly at the end of the financial year. For 2018/19 an estimate for Discretionary Rate Relief has been included in the annual declaration to calculate the locally retained business rates for 2018/19.

Appendix B details the applications which have been rejected and the reason for the recommendation, the total value of the relief in question being £16,915.58, the majority of which (£15,072.77) is in respect of two academy schools. The granting of this relief would result in a loss of income to the Council of £8,288.63 based on its 49% share.

Exempt appendix C details ratepayers who are currently in receipt of 50% mandatory relief under the Rural Settlement scheme.  The Government announced its intention to double rural rate relief to 100% with effect from 1 April 2017.  The relevant amendments are being made to legislation but will not be in place until 2019/20 at the earliest, in the meantime Local Authorities have been asked to utilise their local discount powers to grant 100% rural rate relief to eligible ratepayers for 2017-18 and 2018-19.  The proposed value of relief under this measure is £12,315.35 for 2017-18.

However Local Authorities will be compensated in full for their loss of income as a result of this change to the rural settlement scheme so that there is no cost to the Council in making this award.  This compensation will be paid by section 31 grant and calculated on the basis of the year end returns that councils make under the rates retention scheme.

All appendices provide relevant information and show the amount of relief given which is extracted from the Councils local taxation system. This takes into account all other reliefs granted e.g. small business rate relief, mandatory charitable relief etc together with changes in Rateable Value and date of occupancy.

The cost of granting the above relief will be accounted for via a reduction to the Collectable Debit and incoming receipts for Business Rates.

The LDRR scheme provides additional rate relief for businesses who continue to experience an increase in their net rate payable arising specifically from the 2017 revaluation following the application of all other relevant reliefs.

The currently agreed scheme provides support intended to automatically deliver less than the total available of £272k in 2017-18 but with a balance to be available for hardship cases based on applications. The allocation of funds for 2017-18 through a hardship process is unlikely to utilise the funding available indeed it may not deliver any funding therefore the proposal is to amend the scheme and automatically award higher levels to some businesses.

The scheme will continue to be based around the national transitional relief scheme which covers small (RV up to £20k), medium (RV £20k to £100k) and large properties (RV over £100k). The scheme provides relief at varying levels in order to reduce the impact of the increase in rates due to the 2017 revaluation for properties up to a maximum RV of £200k. The discretionary scheme currently provides further relief for the qualifying properties by reducing net increases to the higher of 2% (inflation) or £100 for small properties; 5% for medium properties with an RV of up to £51k (where the small business rate supplement (SBRS) commences; 7.1% for medium properties with an RV between £51k and £100k; and 14.8% (limited to 50% relief or £3k whichever is the lower) for large properties up to an RV of £200k.

The proposed amendment is to merge the medium properties bandings so that qualifying properties with an RV of between £20k and £100k receive relief to reduce the net increase in rates to 5% and large properties with an RV of between £100k and £200k will receive relief to reduce the net increase in rates to 14.8% (limited to 50% relief or £4k whichever is the lower).

The government will provide funding for local authorities to compensate them for the loss of the authority’s share of the income up to a maximum relief of £272k, relief provided above this level will be borne by the local authority.

Alternative options to be considered include not allowing discretionary relief and allowing relief at a higher or lower level. However, to ensure consistency and equality, the recommendations are in line with the council guidelines and with previous decisions for similar organisations. 

Alternative options for distributing the relief through the Local discretionary rate relief scheme could be considered but the option proposed provides a simple method to maximise the relief granted to qualifying businesses whilst minimising the risk of breaching the governments limits.

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