HMRC are withdrawing their concession which allows a charitable body to use a building for business purposes as long as that business use does not exceed 10% and will, in future, require any business use not to exceed 5%. From 1 July 2010 a charity will need to show that it will use a building for at least 95% non-business use.

It will be able to use any method to determine the percentage as long as that method is “fair and reasonable”. HMRC considers fair and reasonable to mean that the method provides an accurate reflection of the use of the building and that it is easy to determine and check the calculation.

Should the use of the building change within 10 years, such that it no longer meets the 95% non-business use test, there will be a change of use charge. Further commentary on this change can be found in the Members’ Area of this website.