Award of Mandatory and Discretionary Rate Relief policy

1. Introduction

Many of the local businesses and organisations within our district provide facilities which encourage and support our residents in improving the quality of their lives. For this reason, we want to support these businesses so they can continue to provide these facilities to the local community.

We recognise that non-domestic rates can often be a significant expense in the running of an organisation and by reducing that expense, we can indirectly grant some of these organisations.

The Local Government Finance Act 1988 (LGFA 1988), as amended, allows for reductions in the amount of rates payable to certain non-domestic properties, through two types of relief, Mandatory and Discretionary. If an organisation meets the legal requirements for mandatory relief, we must award it. However, it is at our discretion what amount, if any, discretionary relief we will award. This policy aims to set out the factors we will consider when making decisions.

2. Objectives

We will formally review the operation of our discretionary relief policy annually. It is considered good practice that the policy is reviewed regularly to take into account any changes in legislation and to ensure that the policy meets our current corporate priorities.

We have created this to ensure:

• there are guidelines for the factors that we should be consider when making decisions 
• the application process is easier for our customers by setting out the legal requirements and the local criteria that they must meet so applications are considered
• we treat all rate payers making applications for relief fairly and consistently 
• the interests of our Council Tax payers are considered in the decision making process.

3. What is Mandatory Rate Relief?

Under Section 43 of the LGFA 1988, where the occupiers of a non-domestic property are a charity or trustees for a charity (whether registered with the Charity Commission or exempt from registration), they are entitled to 80% mandatory relief.

However, to qualify for such a relief, they must meet the following criteria: 

• The property must be wholly or mainly used for charitable purposes only. This can include a charity shop where the property is used wholly or mainly for charitable purposes at any time, if at the time it is wholly or mainly used for the sale of donated goods and the proceeds of the sale of those goods (after any deduction of expenses) are applied for the purposes of a charity.
• The ratepayer is a club (either registered or exempt from registration) for the purposes of Schedule 18 of the Finance Act 2002 (community sports club) and the building is used for the purpose of that club or that and another registered club.

Sports clubs registered with HM Revenue and Customs as a Community Amateur Sports Club (CASC) are also entitled to relief from rates on any non-domestic property that is wholly or mainly used for the purposes of that club, or that club and other such registered clubs. More information about CASC's, is  found on the CASC website.

The date of registration with the Charity Commission is the effective date for mandatory rate relief as this is conclusive evidence as to charitable status.

Some bodies described in section 3(5) of the Charities Act 1993, are excepted from registration or, as included in Schedule 2 of the Charities Act 1993, are exempt charities, may also be eligible for mandatory relief. However, any charity in respect of any registered place of worship (under the Places of Worship Registration Act 1855) is exempt from rates under paragraph 11 of Schedule 5 to the LGFA 1988.

For more information on exempt charities, please refer to the Charity Commissions leaflet - Exempt Charities (CC23) which can be viewed and printed from their website at The Charity Commission - GOV.UK (www.gov.uk).

4. Discretionary Rate Relief for Charities and Non-Profit Making Organisations

4.1 Legal Background

Although charitable organisations are eligible for 80% mandatory relief, we can top this relief up by up to 20% discretionary relief under Section 47 of the LGFA 1988, thereby awarding 100% relief.

Where the organisation does not qualify for mandatory relief, we are still able to consider awarding discretionary relief, also under Section 47 of the LGFA 1988. We have the discretion to award relief of up to 100% to certain non-profit making organisations.

4.2 Legislative Requirements

We cannot grant discretionary relief from rates to any property which is occupied in part or in full by a billing authority or a precepting authority, unless that authority is acting as a trustee.

For us to consider awarding discretionary relief, the ratepayer must either be a:

• non-profit making organisation whose main goals are charitable, philanthropic or religious, or are concerned with education, social welfare, science, literature or the fine arts
• club, society or other organisation not set up for profit where all or part of the building is used for the purposes of recreation

Entitlement to Discretionary Rate Relief is reviewed annually. We must give a full financial year’s notice before we cancel any award of Discretionary Rate Relief.

4.3 Eligibility Criteria

Where an organisation meets the legislative conditions above, the level of relief will also be determined on the local criteria. We are responsible for the cost of a percentage of any discretionary relief and for this reason, it must consider the interests of its Council Tax payers when making decisions that use public funds.

To be eligible for any award all organisations must be able to show that they also:

• deliver services wholly or mainly to local residents (for example they are located in the Arun District)
• are not administered by a government body
• spend any funds for the benefit of the local community
• make their property available free or at minimal charge to the public
• are able to meet at least one of our following priorities:
  • improvement in the quality of life for residents living in the most disadvantaged areas of the district (which include the Littlehampton wards River, Ham, Wick with Toddington, and the Bognor Regis wards, Marine, Hotham, Bersted, Orchard and Pevensey) 
  • increased level of skills and educational attainment of those living in the district
  • be part of a multi-agency approach to delivering services for children and young people
  • address the most significant health issues and inequalities in the particularly for the most frail and vulnerable people within our community
  • supporting community integration

Although an organisation may meet all the conditions for entitlement, we cannot guarantee that we will award 100% relief, as we must continually consider the impact each award has on the budget. We want to support all businesses that meet the criteria and for this reason, we may need to reduce any award.

4.4 Duration of Awards

Awards will only be granted up to the 31st March of the financial year to which the award relates, therefore, only having effect for one financial year. Continuation of relief will be subject to a new application.

4.5 Backdating

Where a decision on an application is made between the 1st April and 30th September in a financial year, the decision can be backdated to have effect for the previous financial year. If this was to happen, the decision could have effect for 2 years due to the duration of awards as explained.

PART 2 - LEVEL OF AWARD

1. General guidelines for determining Discretionary Rate Relief:

• organisations must provide a clear and precise statement on how they contribute towards our priorities in order to be considered
• organisations must be able to demonstrate that they encourage access by particular groups in the community for example young people, vulnerable, disabled
• it is unlikely that an application for Discretionary Rate Relief will be successful where the accounts of that organisation reveal surpluses of income over expenditure or substantial general reserves in excess of one year’s operating costs that are not set against a specific project to be spent over the next few years
• organisations commissioned by us to deliver core services to the community will be eligible for maximum relief under the scheme
• organisations that provide open access and/free or minimal entry costs to our residents will be given higher priority than organisations providing restricted access and/or charging a membership fee
• National or Regional Organisations who run commercial enterprises such as shops will have to show how its charity helps our residents. You may have to supply a statement to show how proceeds go to support named local charities.
• it is expected that all sports and leisure clubs will be registered with HM Revenue and Customs as a Community Aided Sports Club (which entitles them to the 80% Mandatory Rate Relief). Therefore, sports and leisure clubs will only receive a proportion of the 20% Discretionary Rate Relief

2. Determining the level of relief

When determining the level of relief, if any, that we will award, we will consider each application under one of the following four categories:

Category 1 – Charitable organisations currently receiving core grant funding from us

We will award the following:

a) 80% Mandatory Relief

b) 100% of the remaining 20% Discretionary Relief

Category 2 – Community organisations that provide open access to their premises and do not charge or charge a minimal membership fee

We will award the following:

a) 80% Mandatory Relief

b) a maximum of 75% of the remaining 20% Discretionary Relief

Category 3 – Organisations that provide restricted access to their premises and/or charge a membership fee

We will award the following:

a) 80% Mandatory Relief

b) a maximum of 25% of the remaining 20% Discretionary Rate Relief

Category 4 – Non-Profit Organisations, Community Interest Companies, Clubs and Societies (with no charitable status)

We will award the following:

a) not eligible for Mandatory Relief

b) a maximum of 75% of the total rate bill (Discretionary Rate Relief)

We will score applications from categories 2,3, and 4 as follows:

Criteria	Percentage discount
Open access to premises – free or minimal entrance fee for all	50%
Meeting our priorities	Up to 15%
Actively encourages particular groups in the community for example; young people, vulnerable, disabled	Up to 10%