This Bill proposes substantial changes to the business rates system, aiming to remove the 80% relief that many independent schools have enjoyed for years and to address the disparity between struggling high street retailers and online retail giants.
The UK Government's Non-Domestic Rating (Multipliers and Private Schools) Bill has sparked significant debate and opposition, particularly from the House of Lords.
Independent schools and VAT: A double blow
Reported as one of the most contentious aspects of the Bill is the removal of charitable business rates relief for independent schools, coinciding with the introduction of VAT on private school fees. This dual financial burden has met with fierce opposition due to the lack of notice and the significant impact it would have on these institutions. The proposal is now at high risk of not materialising, reflecting the challenges of implementing such sweeping changes without adequate preparation and consultation.
Affected schools and parents will be quietly hopeful that the debate in the House of Lords around the dangers of a two-tier charitable relief system will mean an end to this section of the Bill and avoid a further rise in costs.
Balancing bricks and mortar with online retail
The Bill also aims to redress the balance between physical retail stores and online retailers by introducing up to 40% relief for properties used for qualifying retail, hospitality, and leisure purposes with a rateable value below £51,000 from April 2026. This relief replaces the previous 75% relief offered until March 2025, subject to an annual cap of £110,000 per business. While intended to support smaller businesses, the planned removal of long-standing reliefs has proven controversial, with varied impacts depending on each ratepayer's circumstances.
Funding the relief
To fund this relief, the Government proposed adding up to 0.1 to the annual multiplier for properties in England with a rateable value of £500,000 or more, translating into an addition of up to 20% on that annual multiplier. This measure was intended to force online retail giants to pay more in business rates, thereby benefiting high street retailers with lower bills. However, this approach has faced criticism for its broad application to any property with a high rateable value, including hospitals, schools, offices, warehouses, and more.
House of Lords' amendments
The Government now faces a difficult decision: whether to amend the proposed legislation to accommodate the House of Lords' objections or to push ahead without considering them. Proper analysis of the numbers has not been carried out and cannot be completed until the 2026 Draft Rating List is delivered by the Valuation Office Agency in June. This uncertainty suggests an anxious wait for both the Government and ratepayers to see what the future holds for business rates liabilities from April 2026 onwards.
The proposed changes to the UK business rates system represent a significant shift in policy, with far-reaching implications for independent schools, high street retailers, and online giants alike. As the Government navigates these complex reforms, it must balance the need for fairness and sustainability with the practical realities faced by businesses across the country. The outcome of this legislative process will undoubtedly shape the landscape of UK business rates for years to come.
.jpg)
.jpg)
.jpg)