How could the rates review affect your organisation?

The review of the non-domestic rating system makes some proposals around the current exemptions that charitable organisations receive on their properties. Voluntary and community organisations could be affected. Here we examine how.

The Review of Northern Ireland's Non-Domestic Rating System is wide-ranging. There are a number of areas that are looked at by this review, but the one that will primarily affect organisations in the community and voluntary sector (and not only those that are registered charities) is the rates exemption that applies to properties being used for charitable purposes.

In England and Wales, rates relief applies to 80% of the rateable value, as compared to 100% in Northern Ireland. If the exemption here was changed to match the level of rates relief in England, affected organisations would pay 20% of the amount that they currently benefit from. Nothing has been decided yet, but whether this is applied could be based on the organisation's income.

So, if it were the case that the non-domestic rates exemption were lowered, how would that affect your organisation's finances?

To find out, you need to know two things. The Net Annual Value (NAV) of the non-domestic properties that your organisation currently occupies (it doesn't matter who the owner is), and the level of exemption that is applied to these properties.

  1. Search the non-domestic NAV list for the property that your organisation occupies. Take note of the Total NAV amount. [At this point, it's worth checking that the property is exempt. If it is, you'll see the same figure as the Total NAV in the (EX)Exempt entry]
  2. Go to the LPS Rates Calculator, select the 'business' property option, type the Total NAV amount into the box, and select the district council that the property is in.
  3. The calculated amount is the annual rates bill that the property is currently exempt from. One-fifth (20%) of this is the amount that you would have to cover if the exemption was lowered to 80%. Take note of this.

If you follow this guide for each properties that you currently occupy, you can sum the total cost that would be liable to your organisation if the charitable exemption were reduced to 80% of its current level.

Of course, the review is still an ongoing process, and changes to the level of exemption or which organisations should benefit from it haven't been decided. The consultation closes on 25 January 2016, so make sure that you know how you might be affected before you respond.

If you need any help with calculating the rate on your organisation's property, please contact us.

Every effort is made to ensure that the contents of this document are accurate, but the advice given should not be relied on as a definitive legal statement.

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