Business rate changes for independent schools take effect: what you need to know

Political back-and-forth fails to change new rules

The Non-Domestic Rating (Multipliers and Private Schools) Bill proposed to remove the 80% charitable business rates relief from independent schools with charitable status, as well as impose a tariff of ‘up to’ 20% on the rates of any large property with a rateable value of £500,000 or more.

Opinions were requested in a consultation paper dated October 2024, entitled ‘Transforming Business Rates’, with a deadline of 31 March 2025 for responses, but the Bill was discussed over the preceding few weeks in the House of Lords where objections were made by the Lords to try to change the Government’s approach.

The Lords proposed that the removal of relief for impacted schools should not happen, but the Government rejected this and restated its commitment to the changes.

The Lords further proposed that some large properties should be exempted from the large property supplement, including healthcare properties, large retail properties and manufacturing facilities. All of these amendments were rejected by the Commons after various votes and consequently the Bill received royal assent on 3 April.

Revised business rates bills to be issued

Local authorities issued their new rates bills in March for the new 2025/26 rate year, but as the Bill was still at the discussion stage then, the rates bills received by around half of independent schools will still have had the 80% relief applied.

Instructions have now been given to local authorities to issue revised bills to the affected schools to remove that 80% relief.

For a small number of larger independent schools, there remains the risk that they could also fall foul of the new tariff being imposed, which could add a further 20% to their rates bill from 1 April 2026.

With there now being certainty around this subject, it’s important for affected schools to ensure they have budgeted correctly. There could also be an increased interest in the sector from the Valuation Office Agency, which is responsible for setting rateable values, to ensure that all improvements that have been made in recent times are adequately reflected.

As with any property, the right to appeal against a rateable value exists, but this can lead to an increased rateable value if the existing valuation is not scrutinised thoroughly, so should be undertaken with caution.

Further information

Contact David Parker

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