The Chancellor of the Exchequer, Philip Hammond MP, will deliver his first Budget tomorrow and we’ll be focusing our attention on two key issues - business rates and corporation tax relief for grassroots sport.
The proposed changes to business rates will in particular have a significant impact on sport and recreation and undermine the objective identified in Sporting Future to support grassroots sport through the tax system. We hope the Chancellor will listen to our members’ concerns and will announce some transitional measures to help the sector adjust to these changes, or look to expand the reliefs available.
Business rates and CASCs
Business rates have been a hot topic lately and grassroots sport, along with other sectors, stands to be hit hard by the forthcoming increase in rateable values.
- Business rates are essentially the equivalent of council tax for businesses and are worked out based on a property’s rateable value.
- The rateable value is based on factors including prevailing market rental values, building type and location.
- The Government has more information on business rates here.
Rateable values are usually reviewed every five years. The last revaluation occurred in 2010 and the Government’s decision to delay the revaluation in 2015 now means that the increases due to come into effect on 1 April 2017 will be much sharper.
Not all sports clubs are currently eligible for rate relief and a wide range of clubs, such as riding schools will be impacted. The worst case scenario is that some clubs may end up being forced to close unless the Government provides further assistance.
We hope that the Chancellor announces an extension of the rate relief or some form of transitional assistance for sports clubs so that more grassroots clubs can be eligible and protected from rising business rates.
Linked to these increases, there are also anomalies in the reliefs available for small businesses and Community Amateur Sports Clubs (CASCs). CASCs currently benefit from 80% rate relief as part of the CASC scheme.
But there is a problem.
From April 2017, small businesses with a rateable value less than £12,000 will be eligible for 100% Small Business Rate Relief (SBRR). However, CASCs cannot elect to take up SBRR and this means a CASC with a rateable value less than £12,000 will be worse off than a club that is not in the scheme. This is both unfair and undermines the attractiveness of the CASC scheme, which is why we’ve raised these points with ministers. We now hope to hear the Chancellor say he will remove these anomalies in the relief available for CASCs and small businesses.
Corporation tax relief for grassroots sports
We also want the Chancellor to reveal more details about the final proposals on corporation tax relief for grassroots sport expenditure. This is a tax charged on a company’s profits. The Government has committed to expand the circumstances in which sports governing bodies and others can get corporation tax relief for contributions to grassroots sport, but we feel these measures could go further.
In our response to the Treasury’s consultation on the draft Finance Bill, which seeks to legislate for these changes, two of our key asks were:
- The reforms should enable governing bodies to claim relief for grassroots expenditure spread over several years
- The reforms should apply to the wide variety of different governing body structures that exist.
The Budget starts after Prime Minister’s Questions and we will be looking out for any factors which could impact our members and will provide our view on what this might mean for sport and recreation.