The Government has released their response to the consultation on changes to the payment process of schools' business rates.

It confirms that the payment of school business rates will be centralised going forward. Essentially, this will involve the Education and Skills Funding Agency (ESFA) paying billing authorities directly on behalf of state-funded schools from April 2022. This will replace the current system in which schools typically receive funding in respect of their rates bill in their budgets, via the NFF, and pay business rates directly to billing authorities.

While there wont be any changes to schools' formal liability for ensuring business rates are paid, ESFA will pay any penalty charges for missed or late payments that are a result of ESFA error. This is a welcome change from the original proposals and mirrors what we pressed on in our formal response. However, schools will continue to be responsible for paying for penalty charges in instances where they are considered 'at fault', such as when a new school fails to inform their billing authority of their rateable value, or when an academy converter fails to inform their billing authority of their conversion. The government intends to adopt a similar approach with local authorities for community and voluntary controlled schools.

To ensure transparency, schools and local authorities will be given access to the new online business rates portal so they can access their data. This will allow schools to remain informed of their bill amount and when this has been paid, including any adjustments made and paid during the reconciliation window.

From 1 April 2022 the functionality for academies to submit historic claims for previously unclaimed years will be removed. Academies have until the end of March 2022 to submit any outstanding historic claims relating to the 2015/16 financial year onwards via the NNDR portal. From 1 April 2022, ESFA will no longer accept, process or reimburse academies for historic claims relating to unclaimed years.

For backdated adjustments which come to light after April 2022 and result in a decrease in rates bills, the responsibility to reclaim any overpayments rests with the liable party (ie. schools, or the local authority for community and voluntary controlled schools).

Where local authorities already offer discretionary relief to schools in relation to their business rates, or wish to do so in the future, this will continue.

To note: When the new system comes into force, ESFA will not be funding rates associated with buildings that are not being used to deliver education. They are therefore encouraging schools with multi-use sites to register buildings which are not used to deliver education for pupils at the school as a separate entity on the Valuation Office Agency's (VOA) rating list. This will ensure that two individual bills are generated - one for the school (which will be paid by the ESFA) and one for any other buildings which are not used to deliver education for pupils at the school, which can then be settled by the appropriate ratepayer

Despite NAHT pressing in our response, the government has decided that maintained nursery schools are out of scope at the present time. However, they have suggested that they intend to explore the feasibility of extending the scheme to maintained nursery schools in the future, and will keep this under review.

Access the full details of the consultation response.