By Altus Group | March 29, 2021

A year on from the first national lockdown, 11 NHS trusts have abandoned their 5-year long legal battle with Councils over the business rates which they have to pay on hospitals.

A test case was brought by Derby Teaching Hospitals NHS Foundation Trust and 16 other NHS trusts who sought to argue that they should be treated the same as charities, who receive a mandatory 80% discount off their bills, when it comes to the business rates tax.

Many private healthcare groups, such as Nuffield Health, the UK’s second largest charity by income, are registered as charities benefitting from 80% mandatory business rates relief.

The High Court had previously ruled that NHS trusts were not charities for the purposes of section 43(6) of the Local Government Finance Act 1988 and were not entitled to 80% charitable relief on their Hospitals.

That ruling dashed hopes of business rates rebates back dated to 1st April 2010 worth around £2.35 billion but 11 of the original NHS trusts petitioned the Court of Appeal. The case has now been dropped meaning hospitals will continue to pay full normal business rates.

Analysis of official Government data by the real estate adviser Altus Group shows that NHS Hospitals in England and Wales will pay a total of £423.02 million in business rates from 1st April for 2021/22 financial year.

The Government are currently reviewing the business rates system and the final report of the ‘Fundamental Review’ will be published in the Autumn later this year. The Government say that will set out the Government’s priorities for reform and its longer-term vision for the system. 

Robert Hayton, UK President of Property Tax at Altus Group, says “this is a classic situation of being legally right but, in the Court of public opinion, morally wrong” adding “it’s for the Government to legislate if it offends their conscience.” 

 

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