National non-domestic rates accounting guidance for local authorities and academies
Updated 17 December 2024
Applies to England
© Crown copyright 2024
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1. National non-domestic rates changes summary
This guidance brings together the main changes and guidance relating to the funding of schools’ national non-domestic rates (NNDR). In April 2022, the Department for Education (DfE) introduced a streamlined payment process for NNDR to reduce burdens on local authority maintained schools and academies.
You can read further information about how to claim NNDR for academies where the billing authority remains on the old payment arrangements.
The centralised payment process involves the department making NNDR payments on behalf of local authority maintained schools and academies directly to billing authorities that have implemented the central NNDR payment process. The central payment process currently remains optional for billing authorities to implement.
It is important to note that the changes do not represent a change in funding levels, but instead represent a more streamlined system which restructures the payment process of existing funding.
The School and Early Years Finance regulations require NNDR to be included within the individual schools’ budget shares (ISB). Therefore, budgets and outturn for both local authorities and schools (maintained and academies) are still required to account for NNDR.
2. Local authority impact (all)
2.1 National non-domestic rates and the national funding formula (NFF)
Please refer to your authority proforma tool (APT) alongside this guidance.
We have added several tables in annex A of this guidance, with illustrative data. These tables are to assist you in completing the ‘Local factors’ worksheet on the 2025 to 2026 APT and will also apply when completing the 2026 to 2027 APT.
The 2025 to 2026 national funding formula (NFF) includes an allocation for NNDR. This is the 2024 to 2025 local authority estimated rates figure provided in the 2024 to 2025 APT plus adjustments for 2023 to 2024 (or inflationary increases to 2024 to 2025 rates taken from the 2024 to 2025 APT ‘Local factors’ worksheet) [footnote 1].
For all local authorities regardless of the payment process adopted by their billing authority we will deduct the NFF NNDR amount for academies from the dedicated schools grant (DSG) rather than it being recouped. Therefore, any academy recoupment will be net of NNDR. For in year converters, we will recoup the whole NFF NNDR amount, pro-rata for the period the academy has been open. There is no impact on local authorities whose billing authority has implemented the central payment process as the department pays the actual bill.
We do not expect to see any adjustments for academies (irrespective of the billing authority approach) in the APT as these are picked up by the department in year.
DSG allocations will show funding both before and after the deduction of the 2025 to 2026 NFF NNDR amount. These amounts are shown in columns G and H in the published DSG allocations. The NNDR amount is not a deduction to allocations but a cash deduction (similar to copyright licences).
2.2 Authority proforma tool (APT) for 2025 to 2026
On the 2025 to 2026 APT local authorities should:
1. Enter the 2024 to 2025 NFF NNDR value (this should be the same figure as recorded in the ‘Local authority estimate of NNDR 2024 to 2025’ worksheet on the 2024 to 2025 APT) in column AC on the ‘Local factors’ worksheet on the 2025 to 2026 APT (see annex A, table 4). This forms the basis for DSG deductions
For example (refer to tables in annex A):
School S2: local authority enters £9,000 (taken from the ‘Local authority estimate 2024 to 2025’ worksheet from the 2024 to 2025 APT) into column AC of the ‘Local factors’ worksheet on the 2025 to 2026 APT.
2. Enter 2024 to 2025 adjustments, if appropriate, in column AD of the ‘Local factors’ worksheet on the 2025 to 2026 APT (see annex A, table 4).
3. If your billing authority or billing authorities are on the centralised payment system where the department pays the bills, we:
- would expect column AD of the ‘Local factors’ worksheet to be left blank, except:
- where local authorities have adjustments such as revaluations which occurred in the last quarter of 2023 to 2024 financial year (January 2024 to March 2024) which were not included in column AD on the 2024 to 2025 APT
-
do not expect to see any adjustments for academies in column AD
- would only expect 2024 to 2025 adjustments for those maintained schools who are in the first year of moving to the central system
4. If your billing authority or billing authorities remain on the old NNDR payment process where schools pay their own NNDR bills:
-
enter any difference between the previously estimated 2024 to 2025 rates value (column AC on the ‘Local factors’ worksheet on the 2024 to 2025 APT) and the now known actual values for 2024 to 2025 in column AD (this can be a positive or negative value)
-
we mainly expect to see adjustments for in year revaluations in this cell
-
adjustments for schools converting to academy status (80% rating relief) should not be entered here (see annex A, tables 1 and 4)
-
enter any inflationary increases (NNDR multiplier) increase applied to the 2025 to 2026 rate in column AD
-
we do not expect to see any adjustments for academies in this column
For example (refer to tables in annex A):
School S2 - local authority enters £2,000 into column AD (adjustments to 2024 to 2025 rates) on the 2025 to 2026 APT ‘Local factors’ worksheet. This is the difference between the NFF NNDR allocation in 2024 to 2025 (£7,000) and the 2025 to 2026 NFF NNDR allocation (£9,000). Local authorities should also include in column AD any difference between the NFF allocation in 2025 to 2026 and the actual bill for 2024 to 2025. This could be a positive or negative adjustment.
School S8 - has converted to academy status in April 2024. The local authority inputs the 2024 to 2025 NNDR estimate figure (£17,000) taken from the ‘NNDR estimate 2024 to 2025’ worksheet on the 2024 to 2025 APT) in column AC (2025 to 2026 NFF NNDR allocation) on the 2025 to 2026 APT ‘Local factors’ worksheet.
School S8 - local authority does not enter any adjustment in column AD (adjustments to 2023 to 2024 rates) on the 2025 to 2026 APT ‘Local factors’ worksheet.
5. Include an estimate for 2025 to 2026 rates on the ‘Local authority estimate of NNDR 2025 to 2026’ worksheet on the APT.
3. Local authority DSG allocations
3.1 Local authorities on the central process
Stage 1
Initial cash deduction - the 2024 to 2025 estimated rates figure (see annex A, table 2) will be deducted from the DSG for those local authorities whose billing authority or billing authorities are on the central payment system, as per NFF NNDR funding. This will have no impact on local authority DSG allocations as deductions equal funding given.
For example (refer to tables in annex A):
School S3 - will have £10,800 (rates figure from the 2024 to 2025 APT ‘Local authority estimate of NNDR 2023 to 2024’ worksheet) deducted from DSG allocations.
Stage 2
Year-end adjustment - as the department pays the actual rates bills for all schools, any in year adjustments will be funded in year and DSG allocations updated at year end to account for actual payments. We will provide the information to do this in a later update.
Stage 3
The new adjusted local authority DSG allocation will form part of the local authority’s accounts with the adjustment being reflected in the ISB and DSG allocations – net zero effect.
3.2 Local authorities not on the central payment system
Stage 1
The 2025 to 2026 DSG includes an allocation for NNDR. This is the 2025 to 2026 NFF NNDR figure (2024 to 2025 estimated rates figure from the 2024 to 2025 APT plus adjustments for 2023 to 2024 (or inflationary increases to 2024 to 2025 rates) as per column AD in the 2024 to 2025 APT).
Local authorities will include the 2024 to 2025 rates estimates figure in schools’ budgets by ensuring it is entered in column AC on the ‘Local factors’ worksheet on their 2025 to 2026 APT (see annex A, table 4).
For example (refer to tables in annex A):
School S3 - NFF NNDR allocation £10,800 (2024 to 2025 estimated rates figure from the 2024 to 2025 APT) should be entered in column AC on the 2025 to 2026 APT ‘Local factors’ worksheet.
Any 2024 to 2025 in year adjustments for example, the difference between column AC on the ‘Local factors’ worksheet on their 2025 to 2026 APT and column AC on the ‘Local factors’ worksheet on their 2024 to 2025 APT will need to be entered in column AD on the ‘Local factors’ worksheet on their 2025 to 2026 APT (see annex A, table 4).
Local authorities should also include in column AD any difference between the NFF allocation in 2025 to 2026 and the actual bill for 2024 to 2025. This could be a positive or negative adjustment. However, this adjustment must not include rating relief adjustments (80%) upon academisation. We would expect any inflationary increases for 2025 to 2026 to be included in column AD.
For example (refer to tables in annex A):
School S2 - local authority enters adjustments into column AD (adjustments to 2024 to 2025 rates) on the 2025 to 2026 APT ‘Local factors’ worksheet. This is the difference between the actual bill (£7,000) in 2024 to 2025 column AC on the ‘Local factors’ worksheet on the 2024 to 2025 APT and the 2025 to 2026 NFF NNDR allocation column AC on the ‘Local factors’ worksheet on the 2025 to 2026 APT (£9,000). If the actual bill for 2024 to 2025 is higher or lower than the 2025 to 2026 NFF allocations, then the local authority must make this adjustment in column AD too
School S8 - converted to academy status in April, the local authority inputs the 2024 to 2025 NNDR estimate £17,000 (taken from the ‘Local authority estimate of 2024 to 2025 rates’ worksheet on the 2024 to 2025 APT) in column AC (2025 to 2026 NFF NNDR allocation) as this is the funding allocated. In the 2025 to 2026 APT the reduced 20% amount should be entered into the ‘Local authority estimate of NNDR 2025 to 2026’ worksheet. This will inform the 2026 to 2027 NFF NNDR allocation
School S8 - local authority does not enter any adjustment in column AD (adjustments to 2024 to 2025 rates) on the 2025 to 2026 APT ‘Local factors’ worksheet.
Stage 2
Schools’ budget shares will include funding for NNDR. These are columns AC and AD on the ‘Local factors’ worksheet on their 2025 to 2026 APT (see annex A, table 4). Local authorities will fund the adjustments (column AD) from the schools block in 2025 to 2026 and will receive this funding via the NFF in 2026 to 2027.
Schools will continue to pay their NNDR bills directly, with academies claiming back the actual amounts from the department as in previous years.
Stage 3
The department will deduct the NFF NNDR amount for academies from the DSG rather than it being recouped. Therefore, academy recoupment will be net of NNDR.
4. Section 251 budget and outturn
Schools’ budget shares continue to include funding for NNDR, this means:
-
all budget section 251s (s251) ISB line will include NNDR amounts (columns AC and AD). That is, no cash deduction
-
local authorities whose billing authority is on the central NNDR payment process must enter their schools 2024 to 2025 actual rates charge in the s251 outturn. This may mean an increase or decrease in line 1.9.1a and an increase or decrease in expenditure
-
local authorities whose billing authority has remained on the old NNDR payment arrangements must enter the NFF NNDR amount in the s251 outturn
5. Consistent financial reporting (CFR)
All local authority maintained schools must record their NNDR charge for 2024 to 2025 in the consistent financial reporting (CFR) (sections I01 and E17) regardless of whether the rates bill is paid by the school, the local authority or the department.
For those local authorities, whose billing authority or billing authorities are on the central payment process we will issue a remittance advice which shows the NNDR amount due, and the amount being recovered by the department to pay the billing authority directly.
6. DSG note to the accounts
Local authorities whose billing authority or billing authorities are on the central payment process should record any difference in DSG funding and actual NNDR payments as an in year adjustment. See annex A, table 5, row G below, which shows an adjustment of £250,000. The ISB figure should also be updated to reflect any adjustment to the DSG. See annex A, table 5, row J below.
There is no change for those local authorities whose billing authority is continuing with the existing arrangements.
To note the Chartered Institute of Public Finance and Accountancy (CIPFA) notes to the accounts are normally subject to annual changes. This may result in further changes to 2024 to 2025 accounts.
7. Academy accounts
Academy trusts need to account for their business rates within their financial statements (see para 3.66 Academies Accounts Direction 2022 to 2023). Academy trusts need to gross up the value of general annual grant (GAG) received by the value of their NNDR bill(s) and include a matching expense.
For those academies, whose billing authority or billing authorities are on the central payment process we will issue a remittance advice showing the GAG payment and the NNDR amount being recovered.
8. Annex A
Table 1: 2024 to 2025 APT ‘Local factors’ worksheet showing NNDR for 2024 to 2025
| Column L |
Column M |
Column N |
Column AC |
Column AD |
|---|---|---|---|---|
| Unique reference number (URN) | Local authority establishment number (LAESTAB) | School name | 2024 to 2025 NFF NNDR allocation |
Adjustment to 2023 to 2024 rates |
| Total | £63,800 | £1,000 | ||
| 111111 | 111111 | S1 | £12,000 | |
| 111112 | 111112 | S2 | £7,000 | £1,500 |
| 111113 | 111113 | S3 | £10,800 | -£500 |
| 111116 | 111116 | S6 | £5,000 | |
| 111120 | 111120 | S8 | £17,000 | |
| 111121 | 111121 | S9 | £12,000 |
Table 2: local authority estimate of NNDR 2024 to 2025 taken from the 2024 to 2025 APT
| Column A | Column B | Column C | Column D |
|---|---|---|---|
| URN | LAESTAB | School name | 2024 to 2025 rates |
| Total | £52,200 | ||
| 111111 | 111111 | S1 | £12,000 |
| 111112 | 111112 | S2 | £9,000 |
| 111113 | 111113 | S3 | £10,800 |
| 111116 | 111116 | S6 | £5,000 |
| 111120 | 111120 | S8 | £17,000 |
| 111121 | 111121 | S9 | £12,000 |
Table 3: 2025 to 2026 APT ‘Indicative NFF NNDR paid by DfE’ worksheet showing NNF NNDR allocation
| Column A | Column B | Column C | Column D |
|---|---|---|---|
| URN | LAESTAB | School name | 2025 to 2026 NFF NNDR excluding prior year adjustments |
| 111111 | 111111 | S1 | £12,000 |
| 111112 | 111112 | S2 | £9,000 |
| 111113 | 111113 | S3 | £10,800 |
| 111116 | 111116 | S6 | £5,000 |
| 111120 | 111120 | S8 | £17,000 |
| 111121 | 111121 | S9 | £12,000 |
Table 4: 2025 to 2026 APT ‘Local factors’ worksheet showing 2025 to 2026 NFF NNDR allocation and 2024 to 2025 adjustments
| Column L | Column M | Column N | Column AC | Column AD |
|---|---|---|---|---|
| URN | LAESTAB | School name | 2025 to 2026 NFF NNDR allocation |
Adjustment to 2024 to 2025 rates |
| Total | £52,200 | £2,000 | ||
| 111111 | 111111 | S1 | £12,000 | |
| 111112 | 111112 | S2 | £9,000 | £2,000 |
| 111113 | 111113 | S3 | £10,800 | |
| 111116 | 111116 | S6 | £5,000 | |
| 111120 | 111120 | S8 | £17,000 | |
| 111121 | 111121 | S9 | £12,000 |
Table 5: NNDR in the DSG note to the accounts
| Reference | Notes | Central expenditure (£’000) |
Individual schools budget (£’000) |
Total (£’000) |
|---|---|---|---|---|
| A | Final DSG for 2024 to 2025 before academy and high needs recoupment | 200,000 | ||
| B | Academy and high needs figure recouped for 2024 to 2025 | 76,000 | ||
| C | Total DSG after academy and high needs recoupment for 2024 to 2025 | 124,000 | ||
| D | Plus: brought forward from 2023 to 2024 | |||
| E | Less: carry forward to 2025 to 2026 agreed in advance | |||
| F | Agreed initial budgeted distribution in 2024 to 2025 | 30,000 | 94,000 | 124,000 |
| G | In year adjustments | 250 | 250 | |
| H | Final budget distribution for 2024 to 2025 | 30,000 | 94,250 | 124,250 |
| I | Less: actual central expenditure | 31,000 | 31,000 | |
| J | Less: actual ISB deployed to schools | 94,250 | 94,250 | |
| K | Plus: local authority contribution for 2024 to 2025 | 0 | ||
| L | In year carry forward to 2025 to 2026 | -1,000 | 0 | -1,000 |
| M | Plus/minus: carry forward to 2025 to 2026 agreed in advance | 0 | ||
| N | Carry forward to 2025 to 2026 | 0 | ||
| O | DSG unusable reserve at the end of 2023 to 2024 | -500 | ||
| P | Addition to DSG unusable reserve at the end of 2024 to 2025 | -1,000 | ||
| Q | Total of DSG unusable reserve at the end of 2024 to 2025 | -1,500 | ||
| R | Net DSG position at the end of 2024 to 2025 | -1,500 |
-
The 2024 to 2025 estimated rates figure as taken from the ‘Local authority estimate of NNDR’ worksheet on the 2024 to 2025 APT (see annex A, table 2). Adjustments for 2023 to 2024 as taken from column AD on the ‘Local factors’ worksheet on the 2024 to 2025 APT (see annex A, table 1). ↩