National non-domestic rates accounting guidance for local authorities and academies
Updated 4 March 2026
Applies to England
© Crown copyright 2026
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National non-domestic rates changes summary
This guidance brings together the main changes and guidance relating to the funding of schools’ national non-domestic rates (NNDR). In April 2022, the Department for Education (DfE) introduced a streamlined payment process for NNDR to reduce burdens on local authority maintained schools and academies.
You can read further information about how to claim NNDR for academies where the billing authority remains on the old payment arrangements.
The centralised payment process involves the department making NNDR payments on behalf of local authority maintained schools and academies directly to billing authorities that have implemented the central NNDR payment process. The central payment process currently remains optional for billing authorities to implement.
It is important to note that the changes do not represent a change in funding levels, but instead represent a more streamlined system which restructures the payment process of existing funding.
The School and Early Years Finance regulations require NNDR to be included within the individual schools’ budget shares (ISB). Therefore, budgets and outturn for both local authorities and schools (maintained and academies) are still required to account for NNDR.
Local authority impact (all)
National non-domestic rates and the national funding formula (NFF)
Refer to your authority proforma tool (APT) alongside this guidance.
We have added several tables in annex A of this guidance, with illustrative data. These tables are to assist you in completing the ‘Local factors’ worksheet and will apply when completing the 2026 to 2027 APT.
The national funding formula for schools and high need: 2026 to 2027 national funding formula (NFF) includes an allocation for NNDR. This is the 2025 to 2026 local authority estimated rates figure provided in the 2025 to 2026 APT plus adjustments for 2024 to 2025 (or inflationary increases to 2025 to 2026 rates taken from the 2025 to 2026 APT ‘Local factors’ worksheet) [footnote 1].
For all local authorities regardless of the payment process adopted by their billing authority we will deduct the NFF NNDR amount for academies from the dedicated schools grant (DSG) rather than it being recouped. Therefore, any academy recoupment will be net of NNDR. For in year converters, we will recoup the whole NFF NNDR amount, pro-rata for the period the academy has been open. There is no impact on local authorities whose billing authority has implemented the central payment process as the department pays the actual bill.
We do not expect to see any adjustments for academies (irrespective of the billing authority approach) in the APT as these are picked up by the department in year.
DSG allocations will show funding both before and after the deduction of the 2026 to 2027 NFF NNDR amount. These amounts are shown in columns G and H in the published DSG allocations. The NNDR amount is not a deduction to allocations but a cash deduction (similar to copyright licences).
Authority proforma tool (APT) for 2026 to 2027
On the 2026 to 2027 APT local authorities should:
Enter the 2025 to 2026 NFF NNDR value (this should be the same figure as recorded in the ‘Local authority estimate of NNDR 2025 to 2026’ worksheet on the 2025 to 2026 APT) in column AB on the ‘Local factors’ worksheet on the 2026 to 2027 APT (see annex A, table 4). This forms the basis for DSG deductions
For example (refer to tables in annex A):
School S2: local authority enters £9,000 (taken from the ‘Local authority estimate 2025 to 2026’ worksheet from the 2025 to 2026 APT) into column AB of the ‘Local factors’ worksheet on the 2026 to 2027 APT.
Enter 2025 to 2026 adjustments, if appropriate, in column AC of the ‘Local factors’ worksheet on the 2026 to 2027 APT (see annex A, table 4).
If your billing authority or billing authorities are on the centralised payment system where the department pays the bills, we:
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would expect column AC of the ‘Local factors’ worksheet to be left blank, except:
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where local authorities have adjustments such as revaluations which occurred in the last quarter of 2024 to 2025 financial year (January 2025 to March 2025) which were not included in column AC on the 2025 to 2026 APT
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do not expect to see any adjustments for academies in column AC
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would only expect 2025 to 2026 adjustments for those maintained schools who are in the first year of moving to the central system
If your billing authority or billing authorities remain on the old NNDR payment process where schools pay their own NNDR bills:
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enter any difference between the previously estimated 2025 to 2026 rates value (column AB on the ‘Local factors’ worksheet on the 2025 to 2026 APT) and the now known actual values for 2025 to 2026 in column AC (this can be a positive or negative value)
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we mainly expect to see adjustments for in year revaluations in this cell
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adjustments for schools converting to academy status (80% rating relief) should not be entered here (see annex A, tables 1 and 4)
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enter any inflationary increases (NNDR multiplier) increase applied to the 2026 to 2027 rate in column AC
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we do not expect to see any adjustments for academies in this column
For example (refer to tables in annex A):
School S2 - local authority enters £2,000 into column AD (adjustments to 2025 to 2026 rates) on the 2026 to 2027 APT ‘Local factors’ worksheet. This is the difference between the NFF NNDR allocation in 2025 to 2026 (£7,000) and the 2026 to 2027 NFF NNDR allocation (£9,000). Local authorities should also include in column AC any difference between the NFF allocation in 2026 to 2027 and the actual bill for 2025 to 2026. This could be a positive or negative adjustment.
School S8 - has converted to academy status in April 2025. The local authority inputs the 2025 to 2026 NNDR estimate figure (£17,000) taken from the ‘NNDR estimate 2025 to 2026’ worksheet on the 2025 to 2026 APT) in column AB (2026 to 2027 NFF NNDR allocation) on the 2026 to 202 APT ‘Local factors’ worksheet.
School S8 - local authority does not enter any adjustment in column AC (adjustments to 2024 to 2025 rates) on the 2026 to 2027 APT ‘Local factors’ worksheet.
Include an estimate for 2026 to 2027 rates on the ‘Local authority estimate of NNDR 2026 to 2027’ worksheet on the APT.
Local authority DSG allocations
Local authorities on the central process
Stage 1
Initial cash deduction - the 2025 to 2026 estimated rates figure (see annex A, table 2) will be deducted from the DSG for those local authorities whose billing authority or billing authorities are on the central payment system, as per NFF NNDR funding. This will have no impact on local authority DSG allocations as deductions equal funding given.
For example (refer to tables in annex A):
School S3 - will have £10,800 (rates figure from the 2025 to 2026 APT ‘Local authority estimate of NNDR 2024 to 2025’ worksheet) deducted from DSG allocations.
Stage 2
Year-end adjustment - as the department pays the actual rates bills for all schools, any in year adjustments will be funded in year and DSG allocations updated at year end to account for actual payments. We will provide the information to do this in a later update.
Stage 3
The new adjusted local authority DSG allocation will form part of the local authority’s accounts with the adjustment being reflected in the ISB and DSG allocations – net zero effect.
Local authorities not on the central payment system
Stage 1
The 2026 to 2027 DSG includes an allocation for NNDR. This is the 2026 to 2027 NFF NNDR figure (2025 to 2026 estimated rates figure from the 2025 to 2026 APT plus adjustments for 2024 to 2025 (or inflationary increases to 2025 to 2026 rates) as per column AC in the 2025 to 2026 APT).
Local authorities will include the 2025 to 2026 rates estimates figure in schools’ budgets by ensuring it is entered in column AB on the ‘Local factors’ worksheet on their 2026 to 2027 APT (see annex A, table 4).
For example (refer to tables in annex A):
School S3 - NFF NNDR allocation £10,800 (2025 to 2026 estimated rates figure from the 2025 to 2026 APT) should be entered in column AB on the 2026 to 2027 APT ‘Local factors’ worksheet.
Any 2025 to 2026 in year adjustments for example, the difference between column AB on the ‘Local factors’ worksheet on their 2026 to 2027 APT and column AB on the ‘Local factors’ worksheet on their 2025 to 2026 APT will need to be entered in column AC on the ‘Local factors’ worksheet on their 2026 to 2027 APT (see annex A, table 4).
Local authorities should also include in column AC any difference between the NFF allocation in 2026 to 2027 and the actual bill for 2025 to 2026. This could be a positive or negative adjustment. However, this adjustment must not include rating relief adjustments (80%) upon academisation. We would expect any inflationary increases for 2026 to 2027 to be included in column AC.
For example (refer to tables in annex A):
School S2 - local authority enters adjustments into column AC (adjustments to 2025 to 2026 rates) on the 2026 to 2027 APT ‘Local factors’ worksheet. This is the difference between the actual bill (£7,000) in 2025 to 2026 column AB on the ‘Local factors’ worksheet on the 2025 to 2026 APT and the 2026 to 2027 NFF NNDR allocation column AB on the ‘Local factors’ worksheet on the 2026 to 2027 APT (£9,000). If the actual bill for 2025 to 2026 is higher or lower than the 2026 to 2027 NFF allocations, then the local authority must make this adjustment in column AC too
School S8 - converted to academy status in April, the local authority inputs the 2025 to 2026 NNDR estimate £17,000 (taken from the ‘Local authority estimate of 2025 to 2026 rates’ worksheet on the 2025 to 2026 APT) in column AB (2026 to 2027 NFF NNDR allocation) as this is the funding allocated. In the 2026 to 2027 APT the reduced 20% amount should be entered into the ‘Local authority estimate of NNDR 2026 to 2027’ worksheet. This will inform the 2027 to 2028 NFF NNDR allocation
School S8 - local authority does not enter any adjustment in column AC (adjustments to 2025 to 2026 rates) on the 2026 to 2027 APT ‘Local factors’ worksheet.
Stage 2
Schools’ budget shares will include funding for NNDR. These are columns AB and AC on the ‘Local factors’ worksheet on their 2026 to 2027 APT (see annex A, table 4). Local authorities will fund the adjustments (column AC) from the schools block in 2026 to 2027 and will receive this funding via the NFF in 2027 to 2028.
Schools will continue to pay their NNDR bills directly, with academies claiming back the actual amounts from the department as in previous years.
Stage 3
The department will deduct the NFF NNDR amount for academies from the DSG rather than it being recouped. Therefore, academy recoupment will be net of NNDR.
Section 251 budget and outturn
Schools’ budget shares continue to include funding for NNDR, this means:
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all budget section 251s (s251) ISB line will include NNDR amounts (columns AB and AC). That is, no cash deduction
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local authorities whose billing authority is on the central NNDR payment process must enter their schools 2025 to 2026 actual rates charge in the s251 outturn. This may mean an increase or decrease in line 1.9.1a and an increase or decrease in expenditure
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local authorities whose billing authority has remained on the old NNDR payment arrangements must enter the NFF NNDR amount in the s251 outturn
Consistent financial reporting (CFR)
All local authority maintained schools must record their NNDR charge for 2025 to 2026 in the consistent financial reporting (CFR) (sections I01 and E17) regardless of whether the rates bill is paid by the school, the local authority or the department.
For those local authorities, whose billing authority or billing authorities are on the central payment process we will issue a remittance advice which shows the NNDR amount due, and the amount being recovered by the department to pay the billing authority directly.
DSG note to the accounts
Local authorities whose billing authority or billing authorities are on the central payment process should record any difference in DSG funding and actual NNDR payments as an in year adjustment. See annex A, table 5, row G below, which shows an adjustment of £250,000. The ISB figure should also be updated to reflect any adjustment to the DSG. See annex A, table 5, row J below.
There is no change for those local authorities whose billing authority is continuing with the existing arrangements.
To note the Chartered Institute of Public Finance and Accountancy (CIPFA) notes to the accounts are normally subject to annual changes. This may result in further changes to 2025 to 2026 accounts.
Academy accounts
Academy trusts need to account for their business rates within their financial statements (see paragraph 3.66 Academies Accounts Direction 2024 to 2025). Academy trusts need to gross up the value of general annual grant (GAG) received by the value of their NNDR bill(s) and include a matching expense.
For those academies, whose billing authority or billing authorities are on the central payment process we will issue a remittance advice showing the GAG payment and the NNDR amount being recovered.
Annex A
Table 1: 2025 to 2026 APT ‘Local factors’ worksheet showing NNDR for 2025 to 2026
| Column L |
Column M |
Column N |
Column AC |
Column AD |
|---|---|---|---|---|
| Unique reference number (URN) | Local authority establishment number (LAESTAB) | School name | 2025 to 2026 NFF NNDR allocation |
Adjustment to 2024 to 2025 rates |
| Total | £63,800 | £1,000 | ||
| 111111 | 111111 | S1 | £12,000 | |
| 111112 | 111112 | S2 | £7,000 | £1,500 |
| 111113 | 111113 | S3 | £10,800 | -£500 |
| 111116 | 111116 | S6 | £5,000 | |
| 111120 | 111120 | S8 | £17,000 | |
| 111121 | 111121 | S9 | £12,000 |
Table 2: local authority estimate of NNDR 2025 to 2026 taken from the 2025 to 2026 APT
| Column A | Column B | Column C | Column D |
|---|---|---|---|
| URN | LAESTAB | School name | 2025 to 2026 rates |
| Total | £52,200 | ||
| 111111 | 111111 | S1 | £12,000 |
| 111112 | 111112 | S2 | £9,000 |
| 111113 | 111113 | S3 | £10,800 |
| 111116 | 111116 | S6 | £5,000 |
| 111120 | 111120 | S8 | £17,000 |
| 111121 | 111121 | S9 | £12,000 |
Table 3: 2026 to 2027 APT ‘Indicative NFF NNDR paid by DfE’ worksheet showing NNF NNDR allocation
| Column A | Column B | Column C | Column D |
|---|---|---|---|
| URN | LAESTAB | School name | 2026 to 2027 NFF NNDR excluding prior year adjustments |
| 111111 | 111111 | S1 | £12,000 |
| 111112 | 111112 | S2 | £9,000 |
| 111113 | 111113 | S3 | £10,800 |
| 111116 | 111116 | S6 | £5,000 |
| 111120 | 111120 | S8 | £17,000 |
| 111121 | 111121 | S9 | £12,000 |
Table 4: 2026 to 2027 APT ‘Local factors’ worksheet showing 2026 to 2027 NFF NNDR allocation and 2025 to 2026 adjustments
| Column L | Column M | Column N | Column AC | Column AD |
|---|---|---|---|---|
| URN | LAESTAB | School name | 2026 to 2027 NFF NNDR allocation |
Adjustment to 2025 to 2026 rates |
| Total | £52,200 | £2,000 | ||
| 111111 | 111111 | S1 | £12,000 | |
| 111112 | 111112 | S2 | £9,000 | £2,000 |
| 111113 | 111113 | S3 | £10,800 | |
| 111116 | 111116 | S6 | £5,000 | |
| 111120 | 111120 | S8 | £17,000 | |
| 111121 | 111121 | S9 | £12,000 |
Table 5: NNDR in the DSG note to the accounts
| Reference | Notes | Central expenditure (£’000) |
Individual schools budget (£’000) |
Total (£’000) |
|---|---|---|---|---|
| A | Final DSG for 2025 to 2026 before academy and high needs recoupment | 200,000 | ||
| B | Academy and high needs figure recouped for 2025 to 2026 | 76,000 | ||
| C | Total DSG after academy and high needs recoupment for 2025 to 2026 | 124,000 | ||
| D | Plus: brought forward from 2024 to 2025 | |||
| E | Less: carry forward to 2026 to 2027 agreed in advance | |||
| F | Agreed initial budgeted distribution in 2025 to 2026 | 30,000 | 94,000 | 124,000 |
| G | In year adjustments | 250 | 250 | |
| H | Final budget distribution for 2025 to 2026 | 30,000 | 94,250 | 124,250 |
| I | Less: actual central expenditure | 31,000 | 31,000 | |
| J | Less: actual ISB deployed to schools | 94,250 | 94,250 | |
| K | Plus: local authority contribution for 2025 to 2026 | 0 | ||
| L | In year carry forward to 2026 to 2027 | -1,000 | 0 | -1,000 |
| M | Plus/minus: carry forward to 2026 to 2027 agreed in advance | 0 | ||
| N | Carry forward to 2026 to 2027 | 0 | ||
| O | DSG unusable reserve at the end of 2024 to 2025 | -500 | ||
| P | Addition to DSG unusable reserve at the end of 2025 to 2026 | -1,000 | ||
| Q | Total of DSG unusable reserve at the end of 2025 to 2026 | -1,500 | ||
| R | Net DSG position at the end of 2025 to 2026 | -1,500 |
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The 2025 to 2026 estimated rates figure as taken from the ‘Local authority estimate of NNDR’ worksheet on the 2025 to 20256APT (see annex A, table 2). Adjustments for 2024 to 2025 as taken from column AC on the ‘Local factors’ worksheet on the 2025 to 2026 APT (see annex A, table 1). ↩