A property in England and Wales that is a ‘place of public religious worship’ is wholly exempt from business rates under Schedule 5 of the Local Government Finance Act 1988, as amended. It qualifies if:

• it ‘belongs to’ the Church of England or the Church in Wales or
• it is registered and certified as a place of worship under the Places of Worship Registration Act 1855 or
• it is a church hall, chapel hall or similar building used in connection with a place of worship.

In Scotland, under section 22 of the Valuation and Rating (Scotland) Act 1956, as amended, churches, church halls, and other places of worship are entered in the Valuation Roll for property tax but are wholly exempt from payment.

‘Worship’ need not necessarily involve the worship of a Supreme Being; for example, Buddhist temples qualify as places of worship.

A building will also be exempt to the extent that it is occupied by the organisation responsible for the conduct of public religious worship and it is used to carry out administrative or other activities in relation to the organisation or the conduct of public religious worship at such a place or it is used as offices for the purposes of the organisation. The valuation officer and the local authority can challenge the valuation on a claim for exemption: see, for example, Glenwright (VO) and Durham City Council v St Nicholas PCC [1988] RA 1 Lands Trib.

There have been several cases about precisely what constitutes a ‘place of worship’ for the purposes of the exemption. The definition of ‘place of worship’ has been reconsidered and widened by the Supreme Court, overruling the decision in R v Registrar General (ex parte Segerdal & Anor) [1970] 3 WLR 479: in R (on the application of Hodkin and another) v Registrar General of Births, Deaths and Marriages [2013] UKSC 77 (which is not a rates case), a chapel of the Church of Scientology was registered under the Places of Worship Registration Act 1855. A theistic approach is no longer considered appropriate.

Note that where the exemption is allowed it is extended to church halls, chapel halls or similar buildings used in connection with a place of public worship. In Ebury (VO) v Church Council of the Central Methodist Church [2009] (LC) (17 July 2009), where two rooms within a church were used as a coffee shop and bookshop run by church volunteers, it was held that they were ‘used in connection with’ a place of public worship and therefore attracted the statutory exemption.

The application of Ebury very much depends on the circumstances. It was distinguished by the Valuation Tribunal (not binding) in Romiley Life Centre (Appeal 423517273728/113N05, heard on 21 June 2011), where the café facilities were considered to be of a ‘prominent’ and commercial character, and so were unable to qualify for an exemption.

In addition, in order to qualify for the exemption the building must be a place of public worship. It has been held that Mormon temples do not qualify for the exemption because they are not open to the public at large but only to Mormons in good standing: see Church of Jesus Christ of Latter-Day Saints v Henning (VO) [1964] AC 420 and Gallagher (VO) v Church of Jesus Christ of Latter-Day Saints [2008] UKHL 56 (30 July 2008).

On the appeal of Gallagher in Church of Jesus Christ of Latter Day Saints v United Kingdom [2014] ECHR 227 the ECtHR upheld the ruling that Mormon temples do not qualify for the full exemption. However, they may still be entitled to the 80 per cent reduction in view of their use for charitable purposes.