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Business rates discretionary relief consultation

Business Rates Discretionary Relief Consultation

Councils have a statutory duty to collect National Non Domestic Rates (NNDR) or ‘business rates’.  Rates are set by the Valuation Office Agency and the Government.  However, councils can award ‘discretionary relief’ in certain cases to reduce a rates bill.

Registered Charities and Community Amateur Sports Clubs are entitled to 80% mandatory rate relief.  Councils can use discretionary powers to top this up to 100%.  For other organisations, which do not qualify for mandatory relief (such as some not-for-profit organisations), councils have discretionary powers to grant up to a full 100% award, i.e. reduce a business rates bill to nil.

Derbyshire Dales District Council has historically used its full discretionary power to support organisations by making 100% and 20% top up awards in the majority of cases.  This has permitted many organisations not to pay any of their business rates bill at all for many years.  

The District Council currently awards £243,000 in discretionary rate relief to 152 organisations, 50% of which impacts upon its budget (and the remainder on the County Council and Fire Authority). 

Council Tax payers meet the cost of this £243,000 subsidy.

Some councils, like Derbyshire Dales, have awarded full rates relief where they are able.  However, other councils operate a more restrained policy.  Instead of granting 100% rate relief, some councils only grant 70%, 80% or 90% relief – and in some cases no relief at all.

Creating better quality jobs

The District Council aims to help the growth of small and medium sized businesses in the Derbyshire Dales.  Encouraging business growth and job creation is the Council’s top priority and public consultation indicates a Thriving District is residents overriding wish.  This is because the Derbyshire Dales suffers from low paid jobs and high house prices, which together are driving younger people to leave the district.

The principle of using a new discretionary rate relief to support the growth of businesses, both based in the Derbyshire Dales or relocating from outside the district, as part of a package of support was unanimously agreed by councillors in October 2017.

At present, businesses within the area can access EU funded grants for business growth and job creation, including the expansion of premises.  However, these will end in 2020 and there is currently uncertainty regarding rural business grant programmes coming in to replace them.

For businesses considering re-location to the Derbyshire Dales, the District Council is currently unable to offer any financial incentives to encourage a business to move here.  This puts the Derbyshire Dales at a disadvantage compared to some other areas.

In both scenarios, the costs of taking new premises and developing a business are significant, and can often be a constraint to growth for smaller companies.

The Council wishes to facilitate business growth and the creation of better quality jobs without increasing the burden on Council Tax payers.  That is why, alongside its business advice service and, to complement other support measures, it is proposing to redirect a proportion of current discretionary relief towards this priority as an investment in the future growth of the local economy.

Preferred options

The Council is consulting on 2 preferred options that would provide a fund to support better quality jobs and business growth. A link to the questionnaire is available at the bottom of this page.

Each option would see a small number of larger charitable / not for profit organisations contributing an amount towards their NNDR liability, but in no case would an organisation be required to pay their whole bill. 

In each option, scout and guide groups, Women's Institutes, playgroups, churches, village halls and community venues providing a similar function would remain fully subsidised from having to pay any of their business rates bill.

The approach would instead be to cap the maximum amount of rate relief given for any one property in a year.

Option A

The maximum amount of discretionary relief to be awarded to any property would be capped at £5,000 pa.

This would affect 5 larger organisations, which would pay between £7,000 and £23,600.

Option B

The maximum amount of discretionary relief to be awarded to any property would be capped at £10,000 pa. 

This would affect 5 larger organisations, which would pay between £2,000 and £18,600.

Examples

A very large organisation currently receiving £20,000 relief on a £20,000 rates bill could be affected by the following amounts:

 

Current

Option A

Option B

Would pay

£0

£15,000

£10,000

A large organisation currently receiving £10,000 relief on a £10,000 rates bill could be affected by the following amounts:

 

Current

Option A

Option B

Would pay

£0

£5,000

 £0

A smaller organisation currently receiving £5,000 or less relief could be affected by the following amounts:

 

Current

Option A

Option B

Would pay

£0

 £0

 £0

A Community Amateur Sports Club currently receiving £850 relief on a £850 rates bill could be affected by the following amounts:

 

Current

Option A

Option B

Would pay

£0

 £0

 £0

A scout or guide group, Women’s Institute, playgroup, church, village hall or community venue providing a similar function currently receiving £1,000 relief on a £1,000 rates bill would not be affected:

 

Current

Option A

Option B

Would pay

£0

£0

£0

The consultation is now closed

Consultation on six initial policy options previously took place between 7 December 2017 and 21 January 2018.

Report to Special Council, 5 March 2018 - consultation results

Council considered the consultation results and agreed to consult further on the preferred options.

Minute no: 334/17, Special Council, 5 March 2018

Following a further report outlining the eligibility of a number of organisations for 100% Small Business Rate Relief (SBRR) as an alternative to discretionary relief, Council agreed to consult on two final options.

Report to Council, 31 May 2018