Charity shops are entitled to mandatory rate relief under section 64(10) of the LGFA 1988.  "A hereditament shall be treated as wholly or mainly used for charitable purposes at any time, if at the time it is wholly or mainly used for the sale of goods donated to a charity and the proceeds of sale of the goods (after any deduction of expenses) are applied for the purposes of a charity".

The phrase 'wholly or mainly' is not defined in the legislation.  Furthermore, as there is no case law that provides guidance on the meaning of 'mainly' used for charitable purposes, it will be held to mean 'more than half', for the purpose of liability for rates.

In deciding whether a charity shop 'wholly or mainly' sells donated goods, the local authority will take the following relevant factors into account:

The percentage of floor space occupied by donated goods
The percentage of turnover and profit represented by the sale of donated goods
The percentage of individual items sold which are donated goods

In terms of value, the donated goods may represent only a small proportion of turnover.  In such circumstances, the weight given to the charitable and non-charitable uses of the hereditament will also be considered even if the charitable use, which could be the main use, occupies less than half of the floor space.

Further Information

Rates Section
Epsom and Ewell Borough Council

Telephone: 01372 732246
Fax: 01372 732247
e mail: businessrates@epsom-ewell.gov.uk