Healthcare Business Rates

Deliver more value

Cost management is an ongoing challenge for the healthcare sector, and streamlining business rates is no exception. With limited budgets and a growing demand for healthcare services, healthcare providers must carefully balance the costs of managing properties with the need to provide high-quality care. Effective cost management requires ongoing analysis and monitoring of business rates, as well as identifying potential cost-saving measures. We’re here to help.

Impact of Revaluation 2023 on Healthcare

The recent changes to healthcare sector property assessments, effective 1 April 2023, offer a somewhat mixed picture. While the national average increase in value ranges between 10% and 20% depending on the property type, there is considerable variation within this range. Some properties may see only modest increases, but our analysis suggests that this could be due to their previous assessments being undervalued. It’s worth noting that while most commercial properties were subject to lockdown restrictions as of 1 April 2021, the effective date for the 2023 Revaluation in England and Wales, most healthcare properties were operational. Therefore, the impact of the COVID-19 pandemic on assessments is less apparent but still important to consider in reviewing them. In England and Wales, these Rateable Values can now be challenged through the Check, Challenge, Appeal process.

Transitional Relief

Positively, for the first time since 1990, there isn’t a scheme to phase in reductions, properties receiving decreased Rateable Values, and bills, immediately.

England and Wales

Previous revaluations across the UK led to initiatives that capped increases in rate liabilities. However, for the 2023 Revaluation, there is limited relief for healthcare providers where the Rateable Value above £100,000 will only see relief if the 2023/2024 liability increase exceeds 30%.

Scotland
Scotland has introduced transitional phasing for the first time, although the scheme is more adverse than England’s, with large properties having their liability increases capped at 37.5%.

Wales
The Welsh Government’s scheme is more favourable, providing relief to ratepayers who continue in occupation, facing an increase of over £300. Here, the increase is phased over two years.

Regulatory compliance

England and Wales

Non-Domestic Rating Act 2023

The Non-Domestic Rating Act 2023 will introduce potentially onerous mandatory obligations on ratepayers to regularly update the tenure and physical details of all properties within their portfolios with the Valuations Office Agency (VOA).

Increasing the administrative burden on businesses, it will require prompt updates to the VOA and annual returns even where there are no changes, with penalty risks for non-compliance. The complexity of business rates management will increase with measures anticipated to be fully in place for the 2026 Revaluation.

Material Change of Circumstance (MCC)

Legislative changes to Material Change of Circumstance provisions took immediate effect in October 2023. They tighten the scope of MCCs in England so that new legislation, licensing regimes and guidance from public bodies will not be grounds for a change in Rateable Value between revaluations.

Completion Notices

For buildings that have been temporarily removed from the rating list during redevelopment, billing authorities will be able to issue Completion Notices in the same way as for a new building. The regulatory changes should be in effect from January 2024.

Scotland

Since January 2023, Scotland’s new legislation has transferred Valuation Appeals to the Scottish Courts Tribunal service. This entails strict deadlines and rigorous requirements for ratepayers and advisors. All appeals against valuations from April 2023 should have been submitted as a comprehensive case with supporting data by 31 August 2023. Learn more about how to appeal business rates in Scotland >

How we can help

Bringing vast experience and industry-specific knowledge, our specialists offer expert insights on how to minimise business rate liabilities. We understand the complexity of the healthcare sector (whether NHS, private or not-for-profit), ranging from the latest acute hospitals through to specialist rehabilitation centres and emerging care plus formats. Our approach is as far removed from a one-off ‘in-and-out’ rating appeal service as it is possible to imagine. We stay close to clients throughout the revaluation period, tracking changes to estates, spotting opportunities for mitigation and providing regular liability forecasting and strategic advice.

Review and Appeal

We know when to appeal and when to leave well alone. Our experience of a diverse range of properties and locations across the UK gives us a tangible edge in our negotiations. This insight and our forensic attention to detail translate into successful appeal strategies.

Budgeting and Forecasting

We can provide certainty with the accuracy of rate bills and can account for future new builds and other changes in your accrual reports, which are crucial when budgeting for new sites and capital investments.

Council Tax

Healthcare properties often straddle the boundary between domestic (Council Tax) and non-domestic (Business Rates). We are experienced in analysing the specific operations of individual sites to ensure that the distinction between the two regimes is applied correctly.

Disturbances and Deletions

As well as advising in respect of the impact of physical changes, including demolitions and temporary disturbances, we also work closely with the Valuation Office Agency and Scottish Assessors to manage and, where possible, ‘prior-agree’ alterations to assessments to reflect these changes.

Exemptions and Reliefs

We ensure all applicable reliefs are properly applied. And as legislation changes, we stay at the forefront of devising innovative solutions to problems posed by the changes. For example, while charitable and other not-for-profit healthcare providers can qualify for charitable rate relief for now, this is under increased scrutiny from billing authorities and the courts.

Historic Rates Audit

Our historic rates audit ensures that past errors and overpayments are resolved and refunded.

Rates Payment Management Service (RPMS)

We offer the market-leading rate payment management service to ensure you only ever pay the correct rates liability.

Vacant Properties

As specialised operational sites, healthcare properties are infrequently vacant. However, in specific circumstances empty rates can become chargeable; here, we work with operators to explore every opportunity to mitigate the liability. This can include removing a redundant property from the Rating List or securing discretionary rate relief for partly occupied properties.

Formerly ‘exempt’ charity hospital agreed with VOA

In 2018 the Valuation Office Agency (VOA) brought into rating a hospital that had previously been treated as exempt and backdated an assessment to 2015. The hospital contained a large proportion of long-term rehabilitation patients and through negotiation we agreed reduced assessments for both the 2010 and 2017 Rating Lists, securing savings in excess of £350,000.

Office accommodation agreed as exempt

Acting for a private operator, we identified that their offices, providing community mental health services, should be exempt from rates. Through negotiation across a number of sites, we saved them over £140,000.

Major NHS hospital assessment reduced

We advised a trust on their main hospital’s business rates, focusing on revising building costs and adopting the Gerald Eve-derived age and obsolescence scale. Following negotiations with the VOA, we achieved a reduced assessment providing savings of £500,000.

NHS community health centre reduced on alternative valuation basis

We advised an NHS Trust that a number of its sites were incorrectly valued on the comparable ‘rentals’ valuation approach. Taking forward Checks and Challenges, we successfully argued that they should be valued on the cost-bases ‘Contractor’s’ approach, resulting in savings more than £200,000.

New private hospital prior-agreed assessment

We advised a private operator on the initial assessment of a new hospital. Having reviewed the cost forecast for the hospital, we recommended prior-agreeing an assessment with the VOA. We secured an assessment 30% less than the building’s headline costs.

Secure unit reduced for long-stay patients

We reviewed the initial assessment of a new secure unit where the VOA had valued the whole property without considering the nature of the patients being entirely long-stay. We argued that the majority of the accommodation should be treated as domestic (Council Tax) resulting in a reduction to the assessment of over 70%.

Disabled property relief secured on Scottish care homes

Having reviewed a client’s estate, we identified that they were not receiving disabled property relief in their Scottish care homes. We liaised with individual sites to collate the required information, made applications for relief and chased refunds from billing authorities totalling over £45,000.

Redevelopment of NHS hospital providing opportunity to reduce assessment

As part of a major redevelopment of a large NHS hospital, a number of buildings were demolished or mothballed. We gathered evidence to show when the buildings were each vacated and subject to initial stripping out. Following negotiations with the VOA, we agreed to a series of reductions to the assessment, providing savings of over £150,000.

£9.3m

total Rateable Value handled

£1.3bn

client savings since 2017, £3.8 bn since 2010

25%

of the FTSE represented