THE ongoing furore over business rates has thrown up the stark divide between the town’s winners and losers as members of the Borough Council renew calls to devolve the tax to local authorities.
Of particular concern are those businesses which the council claims ‘structure themselves’ as charities but run overtly commercial enterprises.
One such organisation is Nuffield Health, which runs a commercial gym in Knights Way. The Times learned of the arrangement during its ongoing investigation, which started last year, into business rates.
Nuffield charges £68.00 per month for full membership which is in line with other commercial gyms in the area. It has paid just £33,330 in rates per annum since the group acquired the premises from Virgin Active in 2014.
This represents an 80 per cent discount, or a saving of £133,000, on the £166,500 that a company not operating through a charity structure would have been forced to pay.
In addition, while some independent firms across the borough will see their rateable value more than double in April, the Knights Way premises is forecast to see no change at all on its current £335,000 valuation.
Companies effectively pay the taxman just under 50p in the pound on the rateable value before other discounts, such as mandatory rate relief for charities, are taken into account.
The council’s Chief Financial Officer, Lee Colyer, speaking to the Times said: “When I have presented to the public there is a bit of a disconnect between what people understand to be charities and those organisations that have structured themselves to be charities, such as private schools and private hospitals.
“Because the Nuffield group is regarded as a charity they then use that charitable status to acquire and run a number of private gyms and because it is run by a charity they get 80 per cent relief.”
The officer added this was a prime example of why decisions over what level rates should be set at are ‘best taken locally.’
A spokesman for Nuffield Health, whose Chief Executive Steve Gray is paid a £400,000 annual salary, said the group qualifies for mandatory business rates relief ‘at all properties’ where it is in rateable occupation and delivering its charitable objectives.
Adding: “We can confirm that Nuffield Health therefore does receive mandatory rates relief at this [Knights Way] property.”
However, the spokesman defended the arrangement, stating: “Nuffield Health is a trading charity that reinvests all its profits back into its services provided via our gyms, medical centres and hospitals. Unlike for profit companies, Nuffield Health does not have shareholders and all Nuffield Health activities are governed by our charitable purpose – to advance, promote and maintain health and healthcare of all descriptions.
“Nuffield Health run a number of charitable initiatives such as free Meet Our Experts events in our gyms and hospitals, a range of free schools programmes, an employability programme for people with long-term health impairments and an exercise based programme for children and teenagers with cystic fibrosis.”
Nuffield Health has 111 gyms across the country.
Gyms avoid the heavy lifting
Unlike the hospitality sector, the fitness industry in Tunbridge Wells appears to have caught a break in the business rates revaluation. Of the seven gyms and fitness studios within the town looked at by the Times only one, Halo Gym on Rock Villa Road, will see an increase in its rateable value from £20,750 to £30,000. The remaining six saw either a reduction or a freeze in their rateable value.
Meanwhile our local MP acknowledges rates impact…
Greg Clark said: “Business rates by law need to be revalued from time to time. The valuation is carried out independently and is revenue neutral.
“However, it is clear that for some businesses, including some local ones, the proposed change is too sharp. I’ve spoken to the Communities & Local Government Secretary and he has said that he is working closely with the Chancellor to determine how best to provide further support to businesses facing the steepest increases. I expect that an announcement will be made on this in next week’s budget.”