As we move forward into the 2025/26 financial year, several key updates have been released that will impact Billing Authorities (BAs) and ratepayers alike. These include confirmation of the interest rate to be applied by BAs in 2025/26, clarification regarding new burdens, and significant updates regarding the Non-Domestic Rating (Multipliers and Private Schools) Act 2025. Here’s a breakdown of these important developments.
Interest Rates for 2025/26 – Payable on Refunds
The standard interest rate applied for the 2025/26 financial year has been set at 3.5%, as confirmed by the Business Rate Information Letter 02/2025 (BRIL). This is a decrease from the previous year’s standard rate of 4.5%. BAs will be required to apply this 3.5% rate when processing refunds during the upcoming financial year.
New Burdens – Grant Determinations and Relief Allocations
The Ministry of Housing, Communities, and Local Government (MHCLG) is expected to release a grant determination shortly, outlining the total allocations made to each local authority, including a detailed breakdown of each relief measure. These payments were issued on 31 March 2025.
The relief measures covered by these allocations include:
- Retail, Hospitality, and Leisure Relief (RHL) for 2023-24
- Supporting Small Businesses (SSB) for 2023-24
- Heat Networks for 2022-23
- Heat Networks for 2023-24
In addition to the relief measures, a ‘New Burdens’ assessment for the Improvement Relief scheme is currently underway. This assessment will take into account the software costs that have been borne by BAs. However, MHCLG has clarified that administrative costs for the assessment will be deferred until a higher volume of cases has been processed, and sufficient certificates from the Valuation Office Agency (VOA) are available. This ensures that more evidence is considered before finalising the calculations for administrative costs.
Non-Domestic Rating (Multipliers and Private Schools) Act 2025
On 3 April 2025, the Non-Domestic Rating (Multipliers and Private Schools) Act 2025 received Royal Assent, bringing significant changes to the way in which private schools and certain other properties will be charged. Starting from 1st April 2025, private schools will no longer be eligible for charitable rate relief. BAs are instructed to remove this relief from affected properties and issue new bills reflecting this change.
Another notable aspect of the Act is its impact on rate multipliers. For properties with a rateable value (RV) of £500,000 or more, higher multipliers will be applied, effective from the 2026/27 financial year. The exact rates for these multipliers will be announced in the Autumn Budget of 2025.
Furthermore, MHCLG has identified a potential loophole regarding the application of the higher multipliers. If ratepayers with properties valued at £500,000 or above subdivide their premises to create multiple occupations—such as by granting subsidiaries or connected entities a portion of the property—there could be an attempt to avoid the higher multiplier. In response, the government may amend the law to ensure that hereditaments occupied by connected parties are treated as a single entity, closing this loophole and ensuring that the higher multiplier applies where appropriate.
For BAs, staying on top of these changes will be essential for ensuring compliance and minimising administrative errors. Ratepayers, especially those affected by the new rules on charitable relief and higher multipliers, should be aware of the upcoming changes and prepare accordingly.
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