NHS business rates challenge

A court date has been confirmed for the NHS challenge spearheaded by Derby Teaching Hospitals with a further 16 trusts supporting the action. The legal challenge is that NHS trusts should be categorized as charities and therefore they should be given an 80% reduction on the rates they currently pay. The case was launched in 2017 when a revaluation of business rates led to an increase of more than 42% to the average hospital rates bill. This increase meant that hospitals needed to look at other ways to reduce spending.

If the NHS trusts are successful, there would be mandatory rates relief backdated to 2010. The ruling would set a precedent that would mean other NHS trusts would similarly look to have business rates reductions and backdated relief payments. The total amount of backdated payments could amount to is £2.4 billon.

Robert Hayton, head of UK business rates at Altus commented “If the case was successful it risks setting a precedent for other deserving public services, with the significant loss in revenue which goes to fund essential public services having to shift to businesses at the next revaluation in 2021 – at a time when the tax burden is already far too high.

How much do hospitals pay

Currently, NHS trusts have a combined business rates liability of £408.6 million for 2019-20.

Wider implications

There are wider implications to the results of this case as other public sector organisations will step forward seeking a reduction in their rates

Private hospitals and schools

Private hospitals and schools can already receive the mandatory rates relief if they have charity status. This is something that is due to be discussed by Ministers this Wednesday when they meet with the Treasury Select committee.

The preliminary court case is due to be heard on 4th November.