£52 Million tax break benefits Private Hospitals whilst the NHS comes under the rates strain

Thursday, August 24, 2017

1 in 4 of all private hospitals in England and Wales are registered as charities and receive lucrative tax breaks, our recent Freedom of Information request reveals.

Charities in England and Wales receive charitable rate relief of 80% if a property is used for "charitable" purposes.

Under the Freedom of Information Act, all Councils were asked to provide details of tax relief given to private hospitals with replies from Councils who provided the requested information revealed 123 out 457 private hospitals held charitable status and were afforded mandatory business rates relief of 80%.

In contrast, NHS Property Services includes business rates bills within the service charge as part of the overall bill for an NHS hospital who pay ordinary rates just like any other commercial property.

The issue of tax breaks for private hospitals has always been a thorny one for politicians. Under the business rates shake up which came into force on 1st April this year, whilst private hospitals have seen their property values, used to calculate the controversial tax, increase overall by 9.4%, in contrast, NHS hospitals have seen their values skyrocket by almost a fifth up 19.26% and will pay £1.83billion in rates over the next 5 years.

Our analysis of official Government figures shows that the 626 properties overall classified by the Government as private hospitals in England and Wales had a combined Rateable Value of £87.77million based on the last property assessment in 2010, which has formed the basis of rates bills for the last 7 years, but this has risen by£8.27million to £96.04million.

Under the Revaluation of business rates, allowing for transitional relief and inflation, private hospitals could have expected to pay £241.37million in business rates over the next 5 years but we forecast, based upon the replies from Councils, that £51.92million will be saved by private hospitals in rates through their charitable status.

Nuffield Health, Britain's 3rd largest charity by income, with 10 employees earning in excess of £250,000, has seen the rateable values on the 32 private hospitals listed on its website actually fall 4.5% from £6.57million to £6.27million under the revaluation which came into effect on 1st April.    

Over the 5 years of the new tax regime, Nuffield Health will pay just £3.19million in business rates on its private hospitals saving £12.74million as a result of its charitable status according to the our analysis. Turnover was up 9% at Nuffield Health to £840million last year.

The Hospital of St John & St Elizabeth in London, which hosts the world famous Karidis Cosmetic Surgery clinic, saw its property valuation used to calculate rates increase from £805,000 to £3.31million, and under the revaluation will pay just £1.17million out of its £5.86million 5 years projected rates bill, allowing for transitional relief and inflation under its charitable status.

The London Clinic, which has held charitable status since 1935, and treats fee paying patients from all around the world, paid just £113,886 last year in business rates out of the overall rates bill of £569,430 and under the revaluation will pay £145,708 this financial year out of an overall bill of £728,540 and will save £3,022,784 over the next 5 years according to our research.

The Government have reaffirmed their commitment to reviewing business rates during the course of this Parliament. We support that and this must include all reliefs and the current inequalities that exist within the system.

It is iniquitous that NHS hospitals pay normal business rates but 26.9% of private hospitals, using charitable status, receive an 80% discount.

HCA International, owner of private hospitals such as The Portland Hospital and London Bridge Hospital, which does not hold charitable status, has previously criticised its rivals for exploiting tax loopholes.

Figures from the Department for Communities and Local Government show mandatory relief for all charitable occupation has increased by £770.50million during the last 7 years and is expected to be £1.77billion this year.