Government Rejects House of Lords Bid To Exclude NHS Hospitals From £75 Million ‘High Street Levy’

NHS Hospitals will now be forced to pay a new Government ‘levy’, worth around £75 million a year, under the plans drawn up to subsidise the tax bills of high street firms from 2026 despite the House of Lords amending legislation to exclude healthcare properties such as NHS Hospitals.

The Government announced, at last year’s Autumn Budget, to address the tax burden imbalance between online retailers and bricks and mortar high street firms, from 2026, that they intend to introduce permanently lower business rates multipliers for high street retail, hospitality and leisure business premises with a rateable value of less than £500,000.

The Government said that to make that high street tax cut fiscally sustainable, and revenue neutral, it would be funded through a new higher multiplier, dubbed the ‘high street levy’, with a supplement of up to 10p for the most valuable properties, those with a rateable value of £500,000 or more, which they said captures the majority of large distribution warehouses including those used by the online giants such as Amazon.

Despite the House of Lords amending the legislation to exclude “healthcare” from the new ‘levy’, Lord Khan, The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government said “while there have been amendments made to the Bill for the Commons to consider, the Government do not accept them.”

This started the process of the bill moving between the Houses, known as parliamentary ‘ping pong’, but with neither House prepared to concede, the House of Lords were forced to abandon their amendments with the bill receiving Royal Assent yesterday (3rd April) and becoming law.

According to the global tax and software firm Ryan 297 NHS Hospitals in England will be subject to the new ‘levy’ including major hospitals such as the Royal London Hospital, Royal Deby Hospital, Bristol’s Southmead Hospital as well as smaller hospitals like

Leigh Infirmary in Lancashire if the will of the House of Lords is ignored by the Government and the legislation receives Royal Assent.

Alex Probyn, Practice Leader of EAP Property Tax at  Ryan, said:
“the amendment from the House of Lords was both sensible and logical – the very largest properties, just like NHS Hospitals, aren’t necessarily those with the broadest shoulders”.

Whilst the exact amount which will be raised by the ‘levy’ won’t be known until later this year when new rateable values are given to all 2 million non-domestic properties in England, ahead of the 2026 revaluation, Ryan say the ‘high street levy’ for NHS Hospitals would likely be in the region of £75 million on current estimates.

The bill also contained provisions relating to private schools and the removal of their 80% charity rate relief. Local Councils have now been asked to immediately remove the relief effective from 1st April and reissue tax demands. This move will affect 1,139 private schools registered as charities and is expected to raise an additional extra £70 million in business rates revenue according to Ryan,

Business rates bills are calculated by multiplying the property’s rateable value, an estimate of open market rent, by figures set by the Government each year. The multiplier figures depend on the value of the property with ratepayers paying the multiplier amount for every £1 of rateable value.

Business rates are devolved to Scotland, Wales and Northern Ireland.