By Altus Group | July 8, 2019

The High Court will decide whether or not to douse a large proportion of the property taxes that NHS Hospitals currently pay on the eve of Bonfire night which could hand trusts, gripped by a funding crisis, a £2.35 billion tax stimulus.

A trial date of 4th November has been set in the long running legal battle between Councils and NHS trusts who say that they should be treated the same as charities, which receive 80% off their bills, when it comes to the business rates tax.

The test case that will be heard was brought by Derby Teaching Hospitals NHS Foundation Trust and 16 Others against 45 Councils. Analysis of official Government data by Altus Group shows that NHS Hospitals in England and Wales will pay a total of £408.55 million in business rates this financial year for 2019/20. This year’s tax bill is up 42.8% with trusts paying £122.38 million more compared to the final year before the 2017 revaluation came into effect.

This financial year hospitals such as the Royal London Hospital will pay £9.16 million in business rates whilst the Queen Elizabeth Hospital in Birmingham and Bristol’s Southmead Hospital will pay £7.15 million and £5.99 million respectively.

Many NHS trusts, ahead of the 2017 Revaluation, said that they had to put additional cost efficiencies in place, on top of the savings that they had already planned for, to ensure that they reached their financial control with no additional funding from Government to specifically address the tax rises.

If successful, tax rebates for mandatory relief will be back dated to 1st April 2010 costing cash-strapped Town Halls and the Government around £2.35 billion overall according to Altus Group.

The Local Government Association who is representing the affected Councils retain the view that NHS trusts and foundation trusts are not charities and, therefore, not eligible for mandatory business rate relief.

Many private healthcare groups, such as Nuffield Health, the UK’s third largest charity by income, are registered as charities benefiting from 80% mandatory business rates relief with Altus Group saying around 1 in 4 of all private hospitals are registered as charities and receive the relief.

Robert Hayton, Head of UK Business Rates at Altus Group, says that “for many people it is Iniquitous to treat NHS hospitals like businesses and expect them to pay normal business rates” and called upon the Government to end the dispute before a costly trial.

Hayton added “that 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 revenue neutral revaluation in 2021 at a time when the tax burden is already far too high.”


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