Guidance

Change to the business rates payment process for schools: guidance for billing authorities

Updated 2 April 2024

Applies to England

1. Introduction

This guidance document is intended to support billing authorities on the centralised national non-domestic rates (NNDR) payment process for state-funded schools, and those billing authorities that have chosen to remain under the old process. We have already confirmed your payment process by email and a revised list of the NNDR payment process for 2024 to 2025 for all billing authorities will be published shortly.

The Education and Skills Funding Agency (ESFA), which is part of the Department for Education (DfE), pays NNDR bills directly to billing authorities that are on the central system on behalf of local authority maintained schools and academies. This includes 16 to 19 academies that are not further education (FE) institutions. It is important to note this is a payment process change and not a change in NNDR policy.

2. Process for billing authorities implementing the centralised payment process

The NNDR online portal opens 2 April 2024. Billing authorities:

• should upload claims data, using the national non-domestic rates claims template for billing authority claims for 2024 to 2025, for all local authority maintained schools and academies within their area for the financial year 2024 to 2025 by 22 May 2024. The first payment to billing authorities will be issued on 28 June 2024. Claims submitted using the incorrect template will be rejected. This may cause a delay to your payments

• should upload in- year adjustments to 2024 to 2025 bills between 23 May 2024 and 31 January 2025.

• can submit prior year adjustments on previously paid claims back to 2018 to 2019 until 31 January 2025. Claims submitted after the 31 January 2025 deadline will be paid during 2025 to 2026 financial year

Reconciliation payments will be made to billing authorities at two points in the year: October 2024 and March 2025. The cut-off date is 11 September 2024 for October payments and 31 January 2025 for the end of year March payment.

October payments will be for positive in-year adjustments only, with the end of year March 2025 payments accounting for both positive adjustments and recovery of rates funding where this applies.

For any new schools that open during the year, billing authorities can upload the bill data for these schools during the adjustment period, 23 May 2024 to 31 January 2025.

Where a maintained school converts to an academy, the billing authority must ensure the existing account linked to the maintained school is closed and a new account is set up in the name of the new academy. The new academy will receive 80% rates relief from when they open. ESFA will not pick up any revaluation charges that relate to the time when the academy was a maintained school.

Where an academy is part of a trust, claims should be submitted at the individual academy level. Billing authorities who are on the centralised payment process for 2024 to 2025 will handle academy adjustments for the previous financial years.

Billing authorities should continue to issue bills to schools for information only and for local accounting purposes.

Billing authorities may be asked to provide further evidence to support NNDR claims for schools where there are significant variances compared to previous years. We anticipate setting tolerance thresholds that are in line with national revaluation figures to account for changes to schools’ rateable values, thereby avoiding the need for billing authorities to unnecessarily submit additional information to ESFA as evidence.

Technical guidance on how to submit a claim will be published when the service goes live. We will advise you separately when this is published.

3. NNDR funding (for education authorities opted in)

Local authorities whose billing authority or billing authorities have adopted the centralised payment process, will have an allocation for NNDR in their dedicated schools grant (DSG). However, ESFA will not include NNDR funding in the DSG payments made to local authorities nor will local authorities’ issue NNDR funding to schools in their budgets. Annex A provides further information on how NNDR is managed in the DSG and authority proforma tool (APT).

4. NNDR academy recoupment (all local authorities)

For all local authorities regardless of the payment process adopted by their billing authority we will deduct the national funding formula (NFF) NNDR amount for academies from the DSG rather than it being recouped. Therefore, any academy recoupment will be net of NNDR.

The national non-domestic rates accounting guidance for local authorities provides further information on how to record NNDR in the end of year accounts.

5. Eligible schools

All local authority maintained schools and academies including 16 to 19 academies that are not FE institutions that deliver education will fall under the new process.

Maintained schools

1. Local authority maintained schools
2. Community school
3. Community special school
4. Foundation school
5. Foundation special school
6. Pupil referral unit (only where a prior arrangement exists)
7. Voluntary aided school
8. Voluntary controlled school
9. City technology college

Academies

1. Pre 16 academy schools
2. Special academies
3. Alternative provision academies
4. Academy 16 to 19 converter
5. Academy 16 to 19 sponsor led
6. Academy special converter (only where a prior arrangement exists)
7. Free schools
8. Free schools alternative provision (only where a prior arrangement exists)
9. Free schools special (only where a prior arrangement exists)
10. Free schools 16 to 19 (only where a prior arrangement exists)
11. Studio schools
12. University technical colleges

Early years school or post-16-provider-based provision which is part of the overall operation will continue to be funded as they have been historically under the new process. Maintained nursery schools are out of scope of these changes.

Sixth forms which are part of secondary schools will also be funded as they have been historically under the new process.

Local authorities are responsible for the NNDR payment of their closed schools. ESFA would not fund these charges.

Billing authorities are able to download a list of their schools and academies by billing authority area for 2024 to 2025.

6. NNDR claims activity

The table below outlines the claims activity for billing authorities in submitting an NNDR claim via the NNDR online portal.

ESFA will undertake checks on NNDR claims. Billing authorities may be asked at any point in the year to provide supporting evidence for claims.

Date	Activity
2 April 2024	NNDR online portal opens for 2024 to 2025 financial year claims
2 April 2024 to 22 May 2024	Billing authorities upload bill data to NNDR online portal
28 June 2024	NNDR payments for new claims issued to billing authorities
23 May 2024 to 31 January 2025	NNDR online portal open for in-year adjustments
11 September 2024	Cut-off for mid-year adjustment/revision claims
31 October 2024	Mid-year reconciliation payments (positive adjustments)
31 January 2025	Final cut off for 2024 to 2025 adjustment claims
31 March 2025	Final reconciliation payments made to billing authorities for claims made up to 31 January 2025 (includes positive adjustments and recovery)

7. Payment timetable

Type of NNDR claim	NNDR claim submission timeframe	Payment date
New claim for financial year 2024 to 2025	2 April 2024 to 22 May 2024	28 June 2024
Adjustments for financial year 2024 to 2025	23 May 2024 to 11 September 2024	31 October 2024
Adjustments for financial year 2024 to 2025 (claims made after 11 September 2024)	12 September 2024 to 31 January 2025	31 March 2025

Billing authorities will receive a single lump sum payment by BACS on the last working day of the month. This payment will be issued to the local authority’s main bank account.

A payment remittance will be issued to the local authority’s registered finance team prior to any payment. A claim and payment breakdown summary will be issued to the claim submitter prior to any payment. These documents should be shared internally for information purposes.

To note: where ESFA requires further evidence or clarification on NNDR claims, we will aim to process these claims within 2 months of receipt.

8. Handling of multi-use sites

ESFA will cover additional rates costs associated with buildings on a school site which are used to deliver education for pupils at the school (for example, a sports hall that is used by pupils during lesson time and in the evenings by the wider community).

We will not cover the additional rates costs associated with buildings which are not used to deliver education for pupils at the school (for example, a children’s centre).

Where a school or the billing authority identifies that a split might be necessary, we advise them to contact the Valuation Office Agency (VOA) to get this assessment corrected.

ESFA will continue to fund, as has been done historically, NNDR bills for those settings which are part of the overall school operation such as early years and sixth form provision within the establishments listed above.

Billing authorities must only upload bill data that relates to the parts of a school site which is used to deliver education and exclude any other buildings. We will check claims to ensure they are registered with the VOA as educational premises.

Examples of these are:

• a school may have a playing field on a separate hereditament^{[footnote 1]} which is used by the school for educational purposes. The billing authority can submit a claim for this

• a school has an adjacent nursery school which is a separate hereditament^{[footnote 1]}. Maintained nursery schools are not part of the new policy change so no claim can be submitted by the billing authority. The billing authority and the school must make arrangements to cover this rates bill

• a school estate may be made up of a single hereditament^{[footnote 1]} which includes a nursery school. As it is not possible to separate this property for rates purposes, and it has been previously funded by ESFA, this will continue to happen

Where there is a clear requirement for a split, the billing authority and school must work together to have this rated separately. This is not a new policy change.

Where ESFA pays a portion of the bill relating to buildings used for delivering education for pupils at the school, it will remain the school’s responsibility to arrange payment with the billing authority for any additional rates costs which exceed the portion paid by ESFA. The onus is with the school to inform the billing authority of the buildings that are used for non-educational purposes.

9. Handling of split sites

Some billing authorities may have schools that operate over more than one site. In those instances, billing authorities can record the claims amount separately for these properties on the claims template.

10. Recovery action

To prevent recovery action, ESFA in agreement with the billing authorities will make a lump sum payment for rates bills by 28 June 2024 in the financial year (or, at the next reconciliation point if a claim is submitted after the initial deadline), for all schools that fall under their remit. ESFA will also pay any adjustments to rates bills to billing authorities twice in the financial year; 31 October 2024 and the end of the financial year, 31 March 2025. These payments will be made as single lump sum.

This agreement falls within the following regulations regarding rates payments:

“a charging authority and a ratepayer may agree that the estimate of the amount payable should be paid in such a manner as is provided by the agreement, rather than in accordance with Schedule 1 of the Regulations”,

which requires payment by instalments.

11. Adjustments

Billing authorities can submit adjustments to ESFA for previously paid claims back to financial year 2018 to 2019. Billing authorities should upload revised bill data to the portal from 23 May 2024 to 31 January 2025, with lump sum payments issued by ESFA on 31 October 2024 and at the end of the financial year, 31 March 2025.

ESFA will cover the cost where historic adjustments result in increased bills, for adjustments which are raised after April and apply to bills claimed prior to April. An example of this is:

1. If the rateable value of a school site has increased due to the construction of a new building in 2023, but this increase has not been reflected in any rates bills received before April 2024.

2. In this instance, once the school informs their billing authority, they would receive an increased bill for 2024 to 2025, which would also reflect the backdated costs relating to 2023 to 2024 arising from the increase in their site’s rateable value.

3. The billing authority would upload the new bill amount to the online billing portal, and ESFA would cover the full cost.

For backdated adjustments, which become known after you have moved across to the centralised payment process and result in a decrease in rates bills, the responsibility to reclaim any overpayments rests with the liable party (that is, schools, or the local authority for community and voluntary controlled schools). For example:

1. If a school demolished a building which resulted in a decrease to their site’s rateable value but continued to pay the original bill amount, the school would be entitled to a refund.

2. However, it remains the responsibility of the school to contact their billing authority to discharge the liability; the billing authority legally cannot get involved in an arrangement between the ratepayer and a third party (ESFA) to discharge the liability.

After the initial claim has been processed for the financial year:

1. Where the rateable value decreases after the bill has been paid to the billing authority, ESFA will calculate the date the change in the rateable value was applicable from. The overpayment by ESFA will be deducted from the payment made to the billing authority for the following financial year.

2. Where the rateable value increases after the bill has been paid to the billing authority, ESFA will calculate the date the change in the rateable value was applicable from. ESFA will pay the billing authority the additional revised amount on 31 October 2024 if the revised bill is submitted by 11 September 2024 or on 31 March 2025 if submitted after 11 September 2024 cut-off date.

3. Any 2024 to 2025 adjustments submitted after the 31 January 2025 deadline will be paid in the following claim year.

12. Discretionary/mandatory relief

Where billing authorities already offer discretionary relief to schools in relation to their NNDR bills, or wish to do so in the future, this will continue under the new process.

The 80% mandatory rates relief applied to academies, voluntary aided schools and foundation schools will remain unchanged under the new process.

Billing authorities are reminded that any relief should continue to be applied to NNDR bills to display a net figure, ensuring that relief is deducted at source before bill amounts are uploaded so that payments are based on net liability.

13. Penalty charges

ESFA will cover any penalty charges on late claims that arise because of an ESFA error.

14. Process for billing authorities not implementing the centralised payment process

The NNDR payment process will remain as previous years for those billing authorities not moving across to the centralised payment process in 2024 to 2025. Maintained schools and academies linked to these billing authorities will continue to pay NNDR bills directly to the billing authority.

15. NNDR funding (for education authorities opted out)

Local authority DSG allocations will include the 2024 to 2025 NFF NNDR amount. Local authorities will include the 2024 to 2025 NFF NNDR amount in schools budgets.

We will issue revised DSG allocations in March 2024 which will include NNDR funding for your maintained schools. DSG payments will be made in April 2024 which will include NNDR funding for your maintained schools

NNDR adjustments due to revaluations for 2024 to 2025 should be submitted in the 2025 to 2026 APT. We will issue APT guidance nearer to the time on how to record this.

You can find further guidance on how to record NNDR in the end of year accounts in the national non-domestic rates accounting guidance.

16. Annex A

DSG

You can find further information on how NNDR is managed within the DSG in the ‘schools block allocations’ section of the DSG: technical note 2024 to 2025 and within DSG allocations for all local authorities and regions 2024 to 2025.

Recoupment

Further guidance on how ESFA calculates the DSG schools block recoupment for the 2024 to 2025 financial year can be found in academies and dedicated schools grant: recoupment.

APT

The how to complete the authority proforma tool (APT) provides step-by-step instructions for local authorities when completing their APT.

1. A property which is or may become liable to a rate, being a unit of such property, which is, or would fall to be, shown as a separate item in the valuation list (As defined in Section 115(1) of the General Rate Act 1967.) ↩ ↩² ↩³