Charity shops face rate rise
CHARITIES could be hit by business rate rises amid reports that councils are considering scrapping their 20 per cent discretionary relief, The Daily Telegraph understands.
Medway council in Kent has already introduced a 20 per cent business rate charge for charity shops and charityrun cafés to try to halt the increasing number of such stores in high streets.
Others are expected to follow suit, local government experts said, with at least six considering similar plans. It comes as some of the most popular restaurants and bars in the country have written to the Chancellor to ask him to rethink plans to increase business rates by as much as 40 per cent.
Companies including Pizza Express and All Bar One warned they may have to close branches if the rate increases are as bad as expected, despite a rate cap and a government relief fund.
Their letter to Philip Hammond, stated: “Margins in our sector are already under intense pressure… there is a very real danger that these increases will result in a freeze in investment and
a scaling back of new openings and job creation.” It added: “We have already seen evidence of outlets closing as a result of the planned increase.”
Ministers are overhauling business rates, which are based on property values, and the Department for Communities and Local Government said 75 per cent of businesses will pay the same or decreased rates.
However, some councils, particularly in London or the South East, fear rises for private companies could force them out of high streets, with charity shops taking their place. Charities enjoy an 80 per cent exemption from business rates by the Government and most councils waive the other 20 per cent.
Liam Booth-Smith, the chief executive of the Localis think tank, said: “Given how tight council finances are it’s perfectly reasonable for councils to look at the amounts charities pay in rates, particularly in advance of the new revaluation.” Rupert Turpin, a councillor in Medway, said that charity shops had previously enjoyed a good deal and while services for vulnerable adults, children and the disabled will not be subjected to the council’s rise in rates, most other charity shops will be.
Councillor Howard Doe said: “We had to strike a balance and we needed to make sure we didn’t drive any essential charities to the wall. If we don’t take it from this area it has to be taken from somewhere else. This is the lesser of the evils.”
A local government department spokesman said the revaluation would ensure rates “closely reflect the property market”.
He added: “Nearly three quarters of business in England will see no change, or even a fall – including 600,000 who from next April will have their bills cut altogether. No small business will see more than a 5 per cent increase this year and we’re providing £3.6 billion in reliefs to help make sure no business is unfairly penalised.”