NHS hospitals hit by crippling rate hikes as private hospitals save millions in 'charitable' tax breaks

Private hospitals are enjoying a £52m tax break on their business rates bill through their charitable status while NHS hospitals are facing crippling hikes, research has revealed.

More than one in four - 27 per cent - of all private hospitals are estimated to be registered as charities and can receive rate relief of 80 per cent, according to figures compiled for the Press Association by business rent and rates specialists CVS.

It calculates this tax perk will save private hospitals in England and Wales £51.9m in business rates over the next five years, slashing the £241.4m they would otherwise be expected to pay.

But this comes as cash-strapped NHS hospitals are being hit with a £1.83bn rates bill over the next five years.

Changes to the business rates system that came into effect in April mean that NHS hospitals in England and Wales will see their annual rates soar by 21 per cent over the next five years, placing yet more strain on the creaking national health service.

Meanwhile, Nuffield Health - Britain's third largest charity by income - will pay just £3.2m in business rates on its private hospitals over the next five years, saving £12.7m as a result of its charitable status, according to CVS.

The Hospital of St John and St Elizabeth in London, which hosts the world famous Karidis Cosmetic Surgery clinic, will pay just £1.2m of its £5.9m rates bill during the next five years, as a result of its charitable status.

Mark Rigby, chief executive of CVS, said: “It is iniquitous that NHS hospitals pay normal business rates but 26.9 per cent of private hospitals, using charitable status, receive an 80 per cent discount.”

He welcomed the Government's plans to review the business rates system, but added “this must include all reliefs and the current inequalities that exist within the system”.

Under the Freedom of Information Act, CVS asked councils to provide details of tax relief given to the 626 private hospitals registered in England and Wales.

It received information for 457 private hospitals, revealing that 123 hold charitable status and are therefore afforded mandatory business rates relief.

The Trust behind one of the NHS hospitals hit with the steepest rise in business rates - the Queen Elizabeth Hospital Birmingham - has joined others in challenging the Government to demand relief on a par with private hospitals.

The University Hospitals Birmingham Trust is also appealing rates bills for the Queen Elizabeth going back to 2010 and plans to appeal the latest rise of more than £2m for 2017.

It said: “The Trust believes there is an anomaly in how NHS Trusts are treated for business rates when compared to other organisations such as universities, charitable care facilities and private hospitals.

“NHS Trusts receive no additional funding to offset business rates costs. We are therefore, alongside other NHS Trusts, part of a long-running challenge to seek a similar level of charitable relief on business rates similar to non-profit organisations.”

Justin Madders, Labour's Shadow Health Minister, said: “The Government’s underfunding of the NHS has pushed hospital finances to the brink with services cut and treatments rationed. Now the Tories’ mishandled business rates plan poses a further threat to patient care.

"It can’t be right that NHS hospitals face hundreds of millions of pounds of rates rises while private hospitals get exemptions. The Government need to get a grip of this mess and say what they’re going to do to sort it out. NHS patients shouldn’t be footing the bill for the Government’s botched business rates rise.”

Press Association