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In London Borough of Merton Council v Nuffield Health [2023] UKSC 18 the Supreme Court has found that Nuffield Health is entitled to charitable business rates relief in respect of an £80 per-month members-only gym. The use of these premises for an exclusive charitable purpose entitles Nuffield Health to such relief, irrespective of whether the membership fee would exclude those of limited means. 

There are two conditions for the entitlement to 80% charitable relief from business rates liability. The first is that the ratepayer is a registered charity or, if the ratepayer is not registered, the rating authority should consider whether it would otherwise meet the test for charitable status by virtue of being established (i) for exclusively charitable purposes and (ii) for the public benefit.  The second condition is that the premises in question are used "wholly or mainly for charitable purposes".

In this case, the Court found both conditions were met. Nuffield Health is a registered charity whose purposes, when viewed as a whole, are exclusively charitable and therefore satisfy the public benefit requirement. On the second question, the Court did not think it was necessary to consider this gym as incidental to or ancillary to Nuffield's charitable purpose as a means of cross-subsidisation of the wider Nuffield operation. The second condition was met simply because the gym facility is used for the direct fulfilment of its charitable purpose – advancing, promoting and maintaining health and healthcare for the public benefit.  

Merton Council had refused relief, arguing that the public benefit test was not satisfied because the £80 membership fee excluded persons of modest means from enjoying the gym facilities. The court dismissed this; the provision of gym facilities at this gym to those who can afford to pay the fee is for the public benefit even though this might exclude some sections of society. In the round, rich and poor are part of the public benefited by Nuffield Health.

The Supreme Court unanimously found that both the exclusive charitable purpose and the public benefit requirement was met, and Nuffield Health was therefore entitled to the mandatory 80% charitable rates relief.