2/2025: Non-Domestic Rating (Multipliers and Private Schools) Act 2025
Published 3 April 2025
Applies to England
© Crown copyright 2025
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To: Chief Finance Officers of English Billing Authorities - For the attention of the Business Rates section
From: Non-Domestic Rates Team, LGF - Local Taxation, Ministry of Housing, Communities and Local Government (ndr@communities.gov.uk)
Date: 3 April 2025
Business Rates Information Letter (2/2025): Non-Domestic Rating (Multipliers and Private Schools) Act 2025
This is the second business rates information letter to be issued by the Ministry of Housing Communities and Local Government in 2025. See previous letters and archived letters.
This letter covers:
- Interest rate for 2025/26 - payable on refunds
- New Burdens
- Non-Domestic Rating (Multipliers and Private Schools) Act 2025
1. Interest rate for 2025/26 - payable on refunds
The Non-Domestic Rating (Payment of Interest) Regulations 1990 (as amended[footnote 1]) provide that the rate of interest payable on refunds of overpaid rates arising from alterations to the rating list should be set for any year at one percentage point below the standard rate on 15 March (or the next business day) in the preceding year.
On 17 March 2025, the standard rate was 4.5%; therefore, the rate of interest to be applied by local authorities for the rating year 1 April 2025 to 31 March 2026 is 3.5%.
Billing authorities are responsible for the local administration of non-domestic rates; this includes billing and collection. Where local billing teams are unsure regarding a billing issue and how interest should be calculated they should, in the first instance, approach their legal team for advice or contact a relevant professional organisation.
2. New Burdens
Following Business Rates Information Letter 5/2023 of 23 November 2023, we will shortly be publishing a grant determination which will provide total allocations to each authority and a breakdown by each relief measure. Payment of this grant was made on 31 March 2025.
The relief measures covered by these allocations are:
- Retail, Hospitality and Leisure Relief (RHL) 2023-24
- Supporting Small Businesses (SSB) 2023-24
- Heat Networks 2022-23
- Heat Networks 2023-24
We are currently undertaking a New Burdens assessment for the Improvement Relief scheme. This will include software costs borne by authorities; however, administration costs for the assessment will be deferred until a higher volume of cases have been processed and certificates have been issued by the VOA, giving us a greater body of evidence on which to base our calculations. We will advise authorities once the software costs have been confirmed.
3. Non-Domestic Rating (Multipliers and Private Schools) Act 2025
The Non-Domestic Rating (Multipliers and Private Schools) Act 2025 has now received Royal Assent. The provisions relating to private schools and the removal of charity rate relief from these hereditaments has effect from 1 April 2025. Billing authorities should therefore remove charitable rate relief (with effect from 1 April) from the affected hereditaments and reissue bills accordingly.
The Act makes provision to allow for the setting of higher multipliers for hereditaments with a rateable value or £500,000 or over, effective from the 2026/27 billing year. The rate of the multiplier will be announced by the Chancellor at the Autumn Budget 2025.
The government is aware of a risk that ratepayers who occupy hereditaments with a rateable value of £500,000 and above may attempt to avoid the higher multiplier by granting multiple occupations within the building to subsidiaries or other connected parties. This could result in the hereditament being split.
If the government sees evidence of such practices and considers them to be avoidance, it may amend the law by regulation to ensure the higher multiplier remains payable. Such a regulation may ensure that where 2 or more hereditaments are occupied by connected persons and would, if occupied by one person, be a single hereditament caught in the higher multiplier, then hereditaments would be treated as single hereditament.