The Supreme Court in June settled a long-running dispute between Nuffield Health and a London borough over its ability to claim an 80% discount on business rates. The decision offers welcome clarity for fee-charging charities and their landlords.
Established in 1954, Nuffield Health is a large healthcare charity operating 13 hospitals and 114 health, fitness and wellbeing centres across the UK. As a charity, it is eligible for an 80% discount on its business rates.
The Nuffield Health gym in Merton Abbey, south west London offers its members a steam room, sauna and creche facilities. Its members pay up to £75 a month to use the popular gym’s facilities.
Merton council argued that because the gym is not open to the public, only to those that can afford its monthly membership fees, its charitable benefit is questionable. It estimates that the reduction in business rates equals £1m in lost revenue for the council.
The dispute was first heard in the High Court in 2016 and then the Court of Appeal before it was passed to the Supreme Court. At all stages, the courts have sided with Nuffield Health.
Whilst involving a relatively small number of tenants – fee-charging charities – it is a dispute that has been closely watched, and for good reason. A report in Property Week (23 June) suggests it might cost local authorities across the country as much as £1bn.
The decision does not change established law but provides welcome clarity for landlords and charities where they use commercial premises to further their charitable aims. It also reaffirms the position of the Charity Commission rather than local authorities as arbiters on what constitutes a public benefit.
However, this decision may not be the end of the story.
With a general election looming and the Labour Party questioning the charitable status of fee-paying schools, the prospect of future legislation affecting fee-charging charities cannot be discounted.
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The above is accurate as at 04 August 2023. The information above may be subject to change.
The content of this note should not be considered legal advice and each matter should be considered on a case-by-case basis.