A recent decision of the Valuation Tribunal, unless successfully appealed, establishes that advancement of religion is now a charitable purpose for rates. Previous legislation and associated case law restricted the religious exemption to churches used for public worship. The educational exemption was restricted to education of the poor. These two restrictions no longer apply.
For an educational “institution”, the Valuation Act 2001 (the Act) extended exemption to buildings used exclusively for the provision of educational services available to the general public - with or without charge, provided either no private profit was involved or it was mainly funded by the Exchequer.
The Act also introduced a general exemption category for :
- a charitable organisation
- that uses buildings exclusively for its charitable purposes,
- otherwise than for private profit.
In reliance on earlier case law, religion was excluded from this general exemption and initially, non-institutional education had to be dedicated to the poor. A charitable organisation was defined and very rigorous criteria were applied in scrutinising its constitutional documents. The Valuation Act 2015 eased these criteria so that a registered charity will now be deemed a charitable organisation. However, retail shops used for fundraising do not qualify.
How Does This Affect Me?
Some educational charities may continue to be rated based on earlier decisions limiting exemption to education of the poor; they may now apply under the general rates exemption as a charitable organisation.
Religious charities may now likewise apply for exemption on their offices or other buildings.
What Should I Do?
Interpretation of rates legislation is a highly technical and evolving area, and the onus is on the applicant to establish entitlement to exemption. Expert legal advice is critical from the outset.