Local government finance circular 4/2022 - non-domestic rates relief: guidance

This circular provides general information relating to current arrangements for non-domestic rates reliefs in 2022 to 2023. It also provides examples of supporting documentary evidence. The information was compiled with the involvement of officers from COSLA and the IRRV.

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Charity Relief

72. The key legislation is Section 4 of the Local Government (Financial Provisions etc.) (Scotland) Act 1962.

73. Properties that are either (i) occupied by a charity in the Scottish Charity Register, held by the Scottish Charity Regulator (OSCR),[12] or by trustees thereof, and that are used wholly or mainly for charitable purposes; or (ii) held on trust for use as an almshouse, are entitled to 80% mandatory Charity Relief.[13]

74. This mandatory element of the relief is 100% funded by the Scottish Government.

75. The local authority also has discretion to 'top up' this relief to 100%.[14] This element of the relief is 75% funded by the Scottish Government. This means that a property receiving 80% mandatory relief and a 20% discretionary top up would see this relief 95% funded by the Scottish Government (80*100 + 20*75).

76. The local authority determines whether occupation is wholly or mainly for charitable purposes. A trading arm of a charity, which is itself a separate entity that is not a charity, may not be eligible for mandatory relief. For charity shops to be eligible, their use must be wholly or mainly for the sale of goods donated to the charity and the proceeds of sale (after expenses) must be applied for the purposes of the charity. To inform this consideration, the relative proportion of new and donated goods sold on the premises may be requested from the occupier.

77. Properties occupied by certain other not-for-profit organisations are eligible to receive up to 100% relief at the discretion of the local authority.[15] To qualify, the purpose of occupation must mainly be charitable or otherwise philanthropic or religious or concerned with education, social welfare, science, literature or the fine arts.

78. The Non-Domestic Rates (Scotland) Act 2020 removes eligibility for Charity Relief from mainstream independent schools[16], leaving it in place for special schools[17] and schools for musical excellence within that category. It does not affect these schools' charitable status. This provision will be commenced on 1 April 2022.[18]

79. Local authorities may have their own policies for awarding discretionary relief. Some current examples of eligibility criteria are:

  • premises does not hold a liquor or gaming licence;
  • premises is not used to carry out commercial operations;
  • the organisation benefits the community.

80. A separate application will normally be required for each rateable property. Joint occupation or use of the premises with another party that does not meet the criteria may affect eligibility. Full details must be provided or the application could be deemed fraudulent and action taken against the applicant. For organisations not registered with OSCR, the local authority may ask for details of their constitution. Where there is any dubiety, local authorities may visit the premises.

81. The 80% mandatory relief appears to be available across the UK and could be regarded as a general measure and therefore unlikely to be considered a subsidy. Any discretionary relief applying to activity not economic in nature is also unlikely to be aid. For charity shops and other commercial activity, local authorities will have to consider whether this must be awarded within the TCA MFA.


Email: NDR@gov.scot

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