A Landmark Government Bill aimed at long term business rates reform, put before parliament days after the General Election, has been subject to significant amendments in the House of Lords.
The Non-Domestic Rating (Multipliers and Private Schools) Bill is designed to do two things. Firstly, introduce a new system of rate poundage multipliers from 1 April 2026 to provide a permanent discount to Retail Hospitality and Leisure (RHL) properties. And secondly, abolish 80% Charitable Relief from private schools’ rates bills from 1 April 2025.
BNP Paribas Real Estate has always supported the policy intention of supporting the high street with reduced multipliers. However, we have always had concerns about the proposal that all properties with a rateable value over £500,000 should attract a higher multiplier to fund a permanent discount to RHL properties.
Government’s intention is to target large online retailer’s warehouses. However, the Lords have rightly picked up on the fact that the proposed legislation would capture sectors that are not within the Government’s target sector. These include NHS hospitals, general manufacturing and indeed, ‘large’ retail properties who would in effect be paying for relief on their lower value properties.
The second part of the Bill relates to the removal of Charitable Relief from private schools. The Lords have voted to remove this entire section from the Bill altogether. They examined the broader educational roles that public schools play and expressed concern about targeting one part of the charity sector over another.
The removal of this relief was one of a number of the Government’s revenue raising plans. The policy intention was that the revenue raised (worth £70m in 2025/26) would be put towards the state education sector. Where will this money now come from, and will another part of the non-domestic rating system be targeted?
It is highly unusual for a Government Bill to fail so badly, and at this stage can only wait and see how they will react to this blow to their revenue raising plans.
