Independent Schools and Business Rates: What Bursars Need to Know in 2025

As we move through 2025, independent schools across the UK are facing a significant shift, one that may not be making headlines in the education press but is quietly rewriting the financial playbook for bursars and finance managers nationwide. The government has removed the 80% charitable rate relief for many private schools. It’s a reform that will and has impacted the majority of independent schools, many of whom have relied on this relief for decades to offset rising operational costs. While the full financial consequences will unfold over time, one thing is clear: every bursar needs to understand what this change means, and what can be done about it.  Many schools have already closed following this change with this and other factors being the drivers of those decisions. What’s Changing? Historically, most independent schools benefit from an 80% reduction in business rates due to their charitable status. This relief has helped ease the burden of managing large, high-value educational estates, often featuring sports facilities, theatres, and historical buildings with high rateable values. But that relief has now been removed as part of the government’s wider reforms aimed at creating a “fairer, more transparent” business rates system. For many schools, this has meant a sudden increase in annual business rate bills by tens, or even hundreds, of thousands of pounds. What Will It Cost? Let’s take a simple example. A school with a rateable value of £400,000 previously paid just 20% of the full business rates liability thanks to charitable relief, amounting to around £40,000 a year. As of April 2025, the charitable relief is removed and the amount payable jumps to c. £200,000 annually which is a huge increase. That’s a fivefold increase in one line of the budget, and a financial reality that schools need to ensure they review ensuring their liabilities are accurate. What Can Schools Do? This isn’t a situation where schools are powerless. While the loss of charitable relief is a government-led change, there are proactive strategies bursars can explore to manage and potentially reduce the overall business rates burden:

1. 1. Undertake a Rating Audit

Ensure your rateable value and liabilities are accurate. Errors in how your school’s property is valued or classified could be costing you thousands.

2. Challenge Your Rates Assessment

If your school’s rateable value has increased disproportionately, or doesn’t reflect current usage or partial occupation, it may be eligible for a formal appeal.

3. Identify Applicable Reliefs

While charitable relief may be removed, other reliefs or exemptions may still apply, particularly for parts of the site not used for core education purposes (vacant buildings, community use areas, etc.).

4. 4. Prepare for the 2026 Rating List

The new rating list comes into effect in April 2026, using April 2024 as the valuation date. If your school's estate or usage has materially changed since then, a proactive approach is essential. Why Dunlop Heywood? At Dunlop Heywood, we work with education providers across the UK to navigate the complexity of business rates. From independent schools to universities and academies, our specialists understand how the system works and more importantly how it can work in your favour. With the changes to charitable relief and the transition to the 2026 rating list, now is the time to act. We offer bespoke audits, full appeals support and ongoing strategy support to ensure your school is rated correctly and not paying more than necessary. Final Thoughts The removal of charitable relief may be one of the most significant costs increases independent schools have faced in a generation. But it doesn’t have to catch you off guard. Understanding your current rating position, exploring appeals and identifying savings opportunities can make a real difference. It’s not just about reacting to the change; it’s about preparing for what comes next. To speak to our education team or arrange an initial audit, get in touch with the Dunlop Heywood team today.