Rating Update
Budgeting for change
As you navigate the complexities of increased business rates for your independent school and the loss of the 80% charitable rates relief in April 2025, we understand that the financial pressures you face are more daunting than ever. Coupled with broader economic challenges and imposition of VAT on school fees from January 2025, ensuring precise and proactive management of your business rates is crucial.
Our schools’ specialists not only ensure your business rates are correct, but we also guide you with strategic advice and reliable support for more efficient business rates budgeting and risk management.
IMPACT OF REVALUATION 2023 ON INDEPENDENT SCHOOLS
Increases in Rateable Values show a mixed picture
The changes to the assessments of independent schools effective from 1 April 2023 showed a very mixed picture, with an average increase of about 12%, but a large number at around 20%. In some cases this masked the fact that the previous assessments were still under appeal. For most schools, valued for rating with reference to re-building costs (the ‘Contractors Basis’), the figures seem to be for ever-rising.
The cost of change
Charitable Relief & VAT
True to their word, the new Government have wasted no time in confirming the expected major tax hit on independent schools: the imposition of VAT on school fees UK-wide from 1 January 2025 and the loss of the 80% charitable relief on business rates from 1 April 2025 for private schools in England.
The Bill relating to the Charitable Relief has now been published with clarity over the Government’s definition of ‘private school’. It is focused on use rather than the legal status of the occupier. Separate nursery rating assessments will continue to receive the relief.
A different approach
A property’s Rateable Value is intended to reflect a market rental value. With the general lack of rental evidence for schools, most continue to be valued on the ‘Contractors Basis’, taking rebuilding costs as the starting point. The rise in building costs over the last six years (circa 20%) has driven the increases in Rateable Values for the 2023 Rating List. This valuation basis is well established for schools, universities, and colleges, but there is no getting away from the inherent flawed assumption that cost equates to value
Within the major cities, there is some evidence of school rental transactions – particularly for smaller properties. However, for most schools, there is a view now that an alternative valuation approach could possibly be applied based on analysis of accounts and ability for the ‘hypothetical tenant’ to pay (i.e. a similar approach to hotels, cinemas, pubs etc). This may better reflect the financial pressures that schools will face going forward.
Regulatory compliance
England and Wales
Non-Domestic Rating Act 2023
The Non-Domestic Rating Act 2023 will introduce potentially onerous mandatory obligations on ratepayers to regularly update the tenure and physical details of all properties within their portfolios with the Valuations Office Agency (VOA).
Increasing the administrative burden on businesses, it will require prompt updates to the VOA and annual returns even where there are no changes, with penalty risks for non-compliance. The complexity of business rates management will increase with measures anticipated to be fully in place for the 2026 Revaluation.
The VOA records are not always up to date. Â We are awaiting clarification as to what extent schools will be required to verify the data held by the VOA and how any historic omissions might need to be declared.
Material Change of Circumstance (MCC)
Legislative changes to Material Change of Circumstance provisions took immediate effect in October 2023. They tighten the scope of MCCs in England so that new legislation, licensing regimes and guidance from public bodies will not be grounds for a change in Rateable Value between revaluations.
Completion Notices
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For buildings that have been temporarily removed from the rating list during redevelopment, billing authorities will be able to issue Completion Notices in the same way as for a new building. The regulatory changes should be in effect from January 2024.
Scotland
Since January 2023, Scotland’s new legislation has transferred Valuation Appeals to the Scottish Courts Tribunal service. This entails strict deadlines and rigorous requirements for ratepayers and advisors. All appeals against valuations from April 2023 should have been submitted as a comprehensive case with supporting data by 31 August 2023. Learn more about how to appeal business rates in Scotland >
How we can help
For the 2017 Rating List, we provided a full rating appeals and consultancy service on over 200 school sites, to clients ranging from the smallest charitable prep schools and large boarding schools, to the largest commercially run groups.
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Review and Appeal
Our approach to school rating assessments is based on a blend of strategic insight and pragmatism that translate into successful appeal strategies. We carefully choose when to question assessments, guided by our considerable experience distinguishing between matters that are factual and areas requiring expert judgment.
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Budgeting and Forecasting
We can provide certainty over business rates bills and help you budget for new buildings, extensions and other changes. While refunds are always welcome, robust budgeting and risk management are equally important for most schools to ensure no unforeseen costs.
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Council Tax
Entitlement to various forms of Council Tax exemption has become a contentious issue in recent years. We have the expertise to navigate appeals against unfavourable treatment.
The Council Tax Bands are still based on values in 1991, with little appetite for revaluations as applied in business rates, Nevertheless, as changes occur at schools, issues do arise, particularly over where single or multiple bands should apply. We advise on this and on issues of Council Tax exemptions and reliefs, when relevant.
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Historic Rates Audit
Our historic rates audit ensures that past errors and overpayments are resolved and refunded.
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Rates Payment Management Service (RPMS)
We offer the market-leading rate payment management service to ensure you only ever pay the correct rates liability. Business rates bills are paid just on time to maximise cash flow and refunds are promptly followed up.
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Vacant Properties
Empty rates are not often an issue for schools with continual demand for space on their sites. However, when schools close or when separately assessed buildings are vacated, the costs are potentially substantial. We advise on how these may be mitigated.
Our clients
Here are a few of the clients that trust us with their business rates.
Why us?
Gerald Eve himself spoke on business rates at the first Independent Schools Bursars’ Conference in 1932. Since then, business rates have remained a core part of our client service. Our advice is continually informed by the latest market data.
Strong working relationships
We have always been at the forefront in communication and negotiations with the head office of the Valuation Office Agency (VOA) and Scottish Assessors Association. We continue to work closely with two other major firms to obtain the best results for the independent schools sector.
Influencing savings
Our distinctive and leading work in the university sector has led to the adoption of the 'Gerald Eve' depreciation scale, a marked improvement over the former 'Monsanto' scale, which has now been rolled out across schools, colleges, healthcare, and other sectors.
Market insights
Our business rates experts are an integral part of our education consultancy team. We are actively involved in lettings, rent reviews and sales, and as such, we bring unrivalled depth of knowledge of the school markets. This can give us the edge in negotiations, and it also puts us in an ideal position to forecast the effects of each new rating revaluation.
NEWS AND INSIGHTS
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