Waverley Borough Council Committee System - Committee Document
Meeting of the Executive held on 02/10/2007
National Non-Domestic Rates Discretionary Rate Relief Policy
WAVERLEY BOROUGH COUNCIL
EXECUTIVE – 2ND OCTOBER 2007
NATIONAL NON-DOMESTIC RATES
DISCRETIONARY RATE RELIEF POLICY
[Wards Affected: N/A]
Summary and purpose
The purpose of this report is for the Council to determine Waverley’s policy for awarding discretionary rate relief for the next four financial years 2008/09 to 20011/12.
There are no direct environmental implications associated with this report.
Waverley’s current discretionary rate relief policy includes organisations that the Council considers to provide important community benefits to the residents of the Borough. Rate relief can help these organisations to focus their resources on providing services.
There are no e-government implications directly associated with this report.
Resource and legal implications
In accordance with normal practice, after the election of the new Council, notice has been given to those organisations currently receiving relief that their relief will be terminated at the end of this current financial year, and the scheme will be reviewed. There are potential financial implications, which are described in this report. Generally, 25% of any discretionary rate relief agreed falls on the General Fund and the 2007/2008 Budget includes £33,500 for the Council’s costs.
Introduction and Background
1. The legislation allows local authorities to grant discretionary rate relief on the rates payable by the following organisations:
ii) non-profit making organisations whose objects are charitable, philanthropic or religious or concerned with education, social welfare, science, literature or the fine arts
iii) non-profit making clubs, societies or other organisations using premises for the purpose of recreation
iv) village stores, post offices in rural settlements and other businesses in rural settlements that exist to benefit the local community.
2. The Council’s current policy is to review the guidelines used by the Council for the granting of discretionary relief on a four-yearly cycle, following the election of a new Council. In accordance with this policy, notice was given in March 2007 to all organisations currently receiving discretionary rate relief to terminate the existing relief with effect from 31 March 2008. All organisations will need to reapply under the new policy guidelines. Once the Council has approved its policy, Waverley’s Scheme of Delegation allows the Director of Finance to agree applications from organisations that are eligible under the Policy. Only when an organisation applies for hardship relief or if they object to the Director of Finance’s decision will an application come to the Executive for a decision.
Granting of rate relief
3. There are two elements of rate relief under the legislation. The first is mandatory relief, that attracts relief at the rate of either 50% or 80%. The second, discretionary relief permits the billing authority to offer relief of up to 100%. (This report does not cover the discretionary relief provisions under Section 49 of the Act covering ‘hardship’, which is an issue considered by the Executive on a case-by-case basis).
4. Mandatory relief relates either to charities or trustees of a charity, which receive 80% relief, or to those properties covered by the regulations which are more commonly known as the ‘rural rate relief’, where the relief is granted at 50%. Where mandatory relief applies, the full amount of the relief given is borne by the NNDR Pool, and no cost of the mandatory relief falls upon the billing authority’s General Fund.
5. This report is concerned with the granting of the discretionary relief under Section 47 of the 1988 Act. The Office of the Communities and Local Government has issued a guidance note ‘Non-domestic rates: Guidance on rate reliefs for charities and other non-profit making organisations’. A copy of the latest edition of this Guidance Note has been placed in the Members’ room and can be downloaded at
6. Waverley’s existing policy for the granting of discretionary rate relief was last reviewed in January 2004. The current policy guidelines adopted by the Council is described below and a summary is attached at
These guidelines indicate both the level of relief to be given and the type of organisation, and are used when considering applications for relief, to ensure that consistent decisions are made in line with Council policy.
Waverley’s current policy guidelines
7. Paragraph 1 above identifies the various types organisations that a local authority can grant discretionary rate relief on the rates payable under the legislation. A billing authority has the discretion to grant up to 100% relief. Waverley’s current policy for the period 2004 to 2008 is to grant discretionary rate relief as follows:
i) Charities receiving 80% mandatory relief will not normally receive any additional discretionary relief, except for those organisations specifically referred to below and individual cases that have previously been approved by the Council.
ii) 80% discretionary relief is granted for non-profit making organisations whose objects are charitable, philanthropic or religious or concerned with education, social welfare, science, or for the purpose of recreation and who are
in receipt of mandatory relief (currently there is one case falling under the category of premises used as a ‘community centre’ and one under the category ‘for the advancement of religion’ although in this case the relief was only granted for 50%). The amount of WBC discretionary relief given in 2007-08 under this category is £2,014, with £504 of this being met by the General Fund.
iii) Where a sports club within Waverley is not allowed to register with the Inland Revenue as a Community Amateur Sports Club (CASC), 50% discretionary relief has been awarded (currently 5 in Waverley). From 1 April 2004, the Local Government Act 2003 amended the 1988 Act by granting 80% mandatory relief to those sports clubs that have registered with the Inland revenue as (CASCs). 25 sports and recreational organisations now receive mandatory relief in accordance with the new legislation and the cost of this relief is met entirely by the NNDR pool. The amount of WBC discretionary relief given in 2007-08 under this category is £11,477, with £2,869 of this being met by the General Fund.
iv) Discretionary rate relief for properties in rural settlements is considered only for sole general stores, post offices or chemist shops. Since the Council first agreed this policy in 1998, applications from a number of other businesses in rural settlements have been considered by Members, but no relief has been granted. There are currently 12 village stores and post offices and 2 chemists in rural settlements within Waverley that are receiving relief. The amount of WBC discretionary relief given in 2007-08 under this category is £11,165, with £5,997 of this being met by the General Fund.
v) As an exception to (i) above, a number of specific organisations currently receive discretionary rate relief in addition to their mandatory relief. 50 organisations currently receive 20% discretionary relief granted in addition to the 80% mandatory relief whilst one organisation receives 10% discretionary relief in addition to the 80% mandatory relief. Amount of WBC discretionary relief given in 2007-08 under this category is £31,908 with £23,929 of this being met by the General Fund.
8. A full list of the organisations currently receiving discretionary rate relief is included at
. The total amount relief granted in 2007-2008 is £56,561. As a general rule, 75% of the discretionary relief granted is offset against the contributions made by Waverley to the National Non-Domestic Rates Pool with the balance of 25% being borne locally and met from the authority’s General Fund. However, for those charitable organisations that receive mandatory relief, any discretionary relief top-up granted is apportioned 25% to the Pool and 75% locally. As a result of this apportionment, the cost to Waverley of granting discretionary relief in 2007/2008 is £33,300 which is included in the approved budget.
Commercial Trust Model - Leisure Community Partnership
9. In July 2007, the Council approved the Strategy for the operation of the Council’s 5 leisure facilities over the next 15 years. Currently a private operator runs these facilities with SERCO running Cranleigh leisure centre and DC Leisure running the others. The operator occupies the buildings and pays the non-domestic rates. This cost is, in effect, charged back to Waverley as part of the management fee that the Council pays the operator to run the service.
10. In July, the Council agreed that the new contract with DC Leisure, starting 1st July 2008, should be on the basis of a community trust model. This method of operating the leisure facilities helps the operator to focus on the community-based facilities by separating the profit-making part of the business. A financial benefit of the trust status model over the commercial arrangement is that NNDR rules allow for different treatment of business rate costs. A commercial operation is not eligible for NNDR relief whereas a trust is. It is known that this approach is followed in a number of neighbouring authorities. When Council agreed to a number of changes to the Leisure Strategy in July it agreed that the review of discretionary rate relief should consider applying relief to the community trust which is proposed for the Council’s five leisure facilities. Officers have examined DCL’s community trust model and are satisfied that it meets the legislative requirements and Waverley’s policy objectives required to qualify for discretionary NNDR relief.
Financial & Risk issues of Community Trust model
11. The current level of NNDR for the five centres is £349,000 per annum, which the leisure operator currently pays and passes on to the Council as part of the management fee. If discretionary rate relief was granted for all five of Waverley’s leisure facilities at 80%, the Council could save up to £200,000 per annum. This figure is 80% of the total rates payable, less the 25% that falls to the Council and less the annual cost of DCL operating this model.
12. As more local authorities adopt this model, there is a potential risk that the Government could change the NNDR rules in the future to prevent local authorities, albeit through, community trust from benefiting from these savings. Therefore the Council whilst being satisfied that the application of discretionary relief to a community trust is entirely legitimate, faces the risks of a dependency being created in Waverley’s budget which would require savings to offset the possible loss of the arrangement. If this arrangement is withdrawn at any future point, the Council would revert to paying DCL the higher management fee to cover the full NNDR cost.
13. The Council could award up to 100% discretionary relief but officers have included an example based on 80% as this is consistent with the maximum relief given to other organisations.
14. There are a number of options available to the authority:
a) To continue with the current policy;
b) To extend the current policy to include the leisure facilities, operated by DC Leisure under the Commercial Trust Leisure Community Partnership model at a rate of 80%;
c) To withdraw all discretionary rate relief - this would save Waverley, on the current years costs, £33,300;
d) To withdraw the discretionary rate relief to those organisations receiving a top-up to mandatory relief they receive – this would save Waverley £28,739;
e) to encourage those organisations that do not currently receive any mandatory relief to apply for charitable status so that they are entitled to mandatory relief and the other benefits of having charitable status.
15. In considering the options, Members are asked to consider a number of factors:
Other financial and service pressures
Consistency of application of the Council’s discretion across organisations
The need for clear and robust policy guidelines that enable the Director of Finance to fulfil his delegated authority to consider applications for relief, minimising the risk of challenge and objection
Waverley’s aims, objectives and priorities
The Executive is requested to consider the options for the granting of discretionary rate relief, as set out in paragraph 14 of this report, for the period from 1 April 2008 to 31 March 2012 and recommend its preferred policy to the Council.
There are no background papers (as defined by Section 100D(5) of the Local Government Act 1972) relating to this report.
EXEC/2007-08/092 NNDR Dis Rate
WAVERLEY BOROUGH COUNCIL
EXECUTIVE – 2ND OCTOBER 2007
Discretionary Rate Relief Guidelines operated by Waverley Borough Council
The following guidelines apply to the 4-year period 1 April 2004 to 31st March 2008.
For organisations that satisfy the conditions of Section 47 of the Local Government Finance Act 1988 for the granting of discretionary relief, and who are not in receipt of mandatory relief in respect of the property, for the general categories of properties listed below the rates chargeable will be reduced by 80%.
(i) Welfare organisations; improvement of health and teaching of first aid; care of the sick, crippled and disabled.
(ii) Institutes; village halls; community centre.
(iii) Premises used for the advancement of religion.
(iv) Educational Trusts.
(v) National Trust premises.
(vi) Youth Hostel.
(vii) (a) Sports and Youth Clubs, whose membership is of a primarily local character, and where no liquor licence is in operation,
(b) In respect of those organisations falling into (vii) (a) above
where a liquor licence is operated
rates chargeable by 50%.
(viii) the sole village store, post office and chemist shop in a rural settlement.
For organisations that satisfy the conditions of Section 47, to remit the rates chargeable on premises used as Day Centres for the Elderly and premises used by the following bodies:-
Scouts and Guides Associations
Hindhead Playing Fields Association
WRVS Gostrey Club
John Stanley Jeffries Swimming Pool Trust (no longer exists)
Haslemere Educational Museum
Chantrys and Byworth Community Association
Remit the payment of rates chargeable against the premises used by the following bodies for the purposes specified:
St. John Ambulance Brigade Ambulance Station
Red Cross Ambulance Station
Phyllis Tuckwell Hospice Charity Shop
Cranleigh Village Hospital Trust Charity Shop
Citizens Advice Bureaux Advice Centres
For organisations that satisfy the conditions of Section 43 (6B) and qualify for 50% mandatory relief to reduce the payment of the rates chargeable by a further 30%, thereby giving total relief of 80%.