The Non-Domestic Rating (Rates Retention and Levy and Safety Net: Miscellaneous Amendments) Regulations 2026

• Citation: S.I. 2026/374
• Sections: 24

Section 1 Citation, commencement and extent

(1) These Regulations may be cited as the Non-Domestic Rating (Rates Retention and Levy and Safety Net: Miscellaneous Amendments) Regulations 2026 and come into force on the day after the day on which they are made.

(2) These Regulations extend to England and Wales.

Section 2 Amendment of the Non-Domestic Rating (Rates Retention) Regulations 2013

The Non-Domestic Rating (Rates Retention) Regulations 2013 are amended in accordance with regulations 3 to 13.

Section 3 Amendment of regulation 2

In paragraph (1) of regulation 2 (interpretation), after the definition of “schedule of instalments” insert—

“ section 31 grant ” means a grant paid to an authority by a Minister of the Crown under section 31 of the Local Government Act 2003 ;

Section 4 Amendment of regulation 3

In regulation 3 (calculation and notification of non-domestic rating income and other amounts)—

(a) before paragraph (1) insert—

(A1) For—

(a) a relevant year beginning on or after 1st April 2026, a billing authority must make the calculations under paragraph (1)(a), (b), (e), (h) and (i) to (l);

(b) any other relevant year, a billing authority must make the calculations under paragraph (1)(a) to (h).

(b) in paragraph (1)—

(i) for the opening words substitute “The calculations are—” ;

(ii) after sub-paragraph (h) insert—

(i) the amount (if any) specified by regulation 7B(2A);

(j) the amount that is its allowance for costs of collection and recovery for that year in accordance with paragraph 2 of Schedule 1;

(k) the amount that is its estimate of the amount (if any) specified by paragraph 2 of Schedule 2 for that year;

(l) the amount that is its estimate of the amount (if any) specified by paragraph 2 of Schedule 2B for that year.

(c) in paragraph (2)—

(i) at the beginning of sub-paragraph (b) insert “subject to sub-paragraph (c),”

(ii) after sub-paragraph (b) insert—

(c) for the year commencing on 1st April 2026 on or before 15th April 2026.

Section 5 Amendment of regulation 4

In the opening words of regulation 4(1) (payment to the Secretary of State in respect of the central share), for “each relevant year” substitute “a relevant year ending on or before 31st March 2026” .

Section 6 Amendment of regulation 7B

In regulation 7B (payments with respect to designated area)—

(a) in paragraph (1)—

(i) for “this regulation” substitute “this paragraph” ;

(ii) after “Non-Domestic Rating (Designated Area) Regulations 2021”, insert “(“ the 2021 Regulations ”)” ;

(b) after paragraph (1) insert—

(1A) The amount specified by this paragraph is the amount of any section 31 grant paid to Redcar and Cleveland Borough Council in respect of an area designated under regulation 3 of the 2021 Regulations.

(c) in paragraph (2)—

(i) for “those Regulations” substitute “the 2021 Regulations” ;

(ii) for “this regulation” substitute “paragraph (1)” ;

(d) after paragraph (2) insert—

(2A) For each year beginning on or after 1st April 2026 that the designation under the 2021 Regulations has effect Redcar and Cleveland Borough Council must make a payment to the Tees Valley Combined Authority equal to 50% of the amount (if any) estimated, in accordance with regulation 3, as the amount specified by paragraph (1A).

(e) in paragraph (3) for “The payment” substitute “A payment under this regulation” .

Section 7 Amendment of regulation 9

In regulation 9 (end of year calculations)—

(a) in the opening words of paragraph (1), for “paragraphs (5) to (8)” substitute “paragraphs (1A) and (5) to (8)” ;

(b) after paragraph (1) insert—

(1A) In relation to a relevant year beginning on or after 1st April 2026, a billing authority must—

(a) make the calculations under paragraph (1)(a), (b) and (bc);

(b) calculate the amount (if any) specified by regulation 7(2), 7B(2) and 7B(2A) for the relevant year.

Section 8 Insertion of regulation 10A

After regulation 10 insert—

Reconciliation of grant payment amounts

(10A)

(1) This regulation applies in relation to a relevant year beginning on or after 1st April 2026.

(2) Where the amount certified under regulation 9, as the amount specified by regulation 7B(2A), is different from the amount estimated for the purposes of regulation 3—

(a) if the certified amount is less than the estimated amount—

(i) the Tees Valley Combined Authority must pay an amount equal to the difference to Redcar and Cleveland Borough Council; and

(ii) Redcar and Cleveland Borough Council must transfer an amount equal to the difference from its general fund to its collection fund;

(b) if the certified amount is more than the estimated amount—

(i) Redcar and Cleveland Borough Council must pay an amount equal to the difference to the Tees Valley Combined Authority; and

(ii) Redcar and Cleveland Borough Council must transfer an amount equal to the difference from its collection fund to its general fund.

(3) Where the amount certified under regulation 9, as the amount specified under paragraph 2 of Schedule 2, is different from the amount estimated for the purposes of regulation 3—

(a) if the certified amount is less than the estimated amount the billing authority must transfer an amount equal to the difference from its general fund to its collection fund;

(b) if the certified amount is more than the estimated amount the billing authority must transfer an amount equal to the difference from its collection fund to its general fund.

(4) Where the amount included in the calculation of the certified non-domestic rating income in paragraph 1(1B)(a) of Schedule 1 is different to the amount estimated for the purposes of regulation 3, and that difference does not relate to the circumstances mentioned in paragraphs (2) or (3)—

(a) if the certified amount is less than the estimated amount the billing authority must transfer an amount equal to the difference from its general fund to its collection fund;

(b) if the certified amount is more than the estimated amount, the billing authority must transfer an amount equal to the difference from its collection fund to its general fund.

(5) Where the amount certified under regulation 9, as the amount specified by paragraph 2 of Schedule 2B (calculations for Port of Bristol) is different to the amount estimated for the purposes of regulation 3—

(a) if the certified amount is less than the estimated amount the billing authority must transfer an amount equal to the difference from its general fund to its collection fund;

(b) if the certified amount is more than the estimated amount the billing authority must transfer an amount equal to the difference from its collection fund to its general fund.

Section 9 Amendment of regulation 12

In regulation 12 (reconciliation of amounts where authority has failed to act diligently), for “regulation 9(1)” substitute “regulation 9(1) or (1A)” .

Section 10 Amendment of Schedule 1

In Schedule 1 (non-domestic rating income)—

(a) in paragraph 1(1)—

(i) for the formula which appears immediately after the opening words substitute—

(ii) at the end of the definition of “E” omit “and”;

(iii) after the definition of “F” insert—

“ G ” is—

for a relevant year commencing on or after 1st April 2026, the amount calculated in accordance with sub-paragraph (1A);

for any other relevant year, zero; and

“ H ” is—

for a relevant year commencing on or after 1st April 2026, the amount calculated in accordance with sub-paragraph (1B);

for any other relevant year, zero.

(b) after paragraph 1(1) insert—

(1A) The amount calculated in accordance with this paragraph is the total amount of any section 31 grants paid to the authority for the year towards expenditure incurred or to be incurred by the authority in relation to the retention, payment, transfer and reconciliation of the non-domestic rates payable to the authority under sections 43 and 45 of the 1988 Act.

(1B) The amount calculated in accordance with this paragraph is the total amount of any section 31 grants paid to the authority for the year (included in the amount calculated under sub-paragraph (1A)) in relation to—

(a) areas designated under paragraph 39 of Schedule 7B to the 1988 Act; and

(b) Port of Bristol hereditaments satisfying the definition in paragraph 1(2) of Schedule 2B to these Regulations.

(c) in paragraph 1(2)—

(i) in the opening words, for “a special authority” substitute “a relevant year falling within the period beginning with 1st April 2013 and ending with 31st March 2027, where the authority is a special authority” ;

(ii) in paragraph (b)(iia) for “or after 1st April 2024” substitute “1st April 2024 or 1st April 2025” ;

(iii) after paragraph (b)(iia) insert—

(iib) for the financial year beginning on 1st April 2026 is £14,009,000;

(d) for paragraph 2(3) substitute—

(3) The cost factor for a billing authority is—

(a) for a relevant year ending on or before 31st March 2026, the cost factor shown for that authority in Part 2 of this Schedule;

(b) for a relevant year beginning on or after 1st April 2026 the cost factor shown for that authority in Part 3 of this Schedule.

(e) after Part 2 insert Part 3 which is set out in Schedule 1 to these Regulations.

Section 11 Amendment of Schedule 2B

For the heading of Schedule 2B (deduction from central share payment for Port of Bristol), substitute “Calculations for Port of Bristol” .

Section 12 Amendment of Schedule 3

In Schedule 3 (transfer from collection fund to general fund)—

(a) for the formula which appears immediately after the opening words substitute—

(b) for the definition of “U” substitute—

“ U ” is—

for a relevant year ending on or before 31st March 2026, the amount of a deduction from the central share payment made in accordance with regulation 4(1);

for a relevant year beginning on or after 1st April 2026, zero;

(c) for the definition of “V” substitute—

“ V ” is—

for a relevant year ending on or before 31st March 2026, the total of any amounts paid to major precepting authorities in accordance with regulation 6;

for a relevant year beginning on or after 1st April 2026, zero;

(d) after the definition of “V” insert—

“ W ” is—

for a relevant year ending on or before 31st March 2026, zero;

for a relevant year beginning on or after 1st April 2026, the amount calculated in accordance with the formula—

where—

“ A ” is the amount calculated under paragraph 1(1B) of Schedule 1;

“ B ” is the amount specified in regulation 7B(2A).

Section 13 Amendment of Schedule 4

In Schedule 4 (calculation of surplus or deficit), after paragraph 1(3)(e) insert—

(f) section 31 grants paid to the billing authority which, under the conditions to which the grants were subject, must be credited to the authority’s collection fund income and expenditure account.

Section 14 Amendment of the Non-Domestic Rating (Levy and Safety Net) Regulations 2013

The Non-Domestic Rating (Levy and Safety Net) Regulations 2013 are amended in accordance with regulations 15 to 20.

Section 15 Amendment of regulation 4

For regulation 4 (meaning of retained rates income for purposes of levy and safety net calculations) substitute—

Meaning of retained rates income for purposes of levy and safety net calculations

(4)

(1) Where the authority is a billing authority, its retained rates income—

(a) for a year ending on or before 31st March 2026, is the amount calculated in accordance with paragraphs 1 and 1A of Schedule 1, paragraphs 3 and 4 of Schedule 1A, paragraph 4 of Schedule 1B, Schedule 6A and Schedule 7;

(b) for a year beginning on or after 1st April 2026, is the amount calculated in accordance with paragraph 2 of Schedule 1ZA.

(2) Where the authority is a major precepting authority, its retained rates income—

(a) for a year ending on or before 31st March 2026, is the amount calculated in accordance with paragraph 2 of Schedule 1, paragraphs 5, 6, 7 and 8 of Schedule 1A and paragraph 5 of Schedule 1B;

(b) for a year beginning on or after 1st April 2026, is the amount calculated in accordance with paragraph 3 of Schedule 1ZA.

(3) Where the authority is a pool of authorities, its retained rates income—

(a) for a year ending on or before 31st March 2026, is the amount calculated in accordance with paragraph 3 of Schedule 1;

(b) for a year beginning on or after 1st April 2026, is the amount calculated in accordance with paragraph 4 of Schedule 1ZA.

Section 16 Amendment of regulation 5

In regulation 5 (business rates baseline and baseline funding level)—

(a) in paragraph (3)—

(i) in sub-paragraph (c) for “the years commencing on or after 1st April 2024” substitute “a year falling within the period beginning with 1st April 2024 and ending with 31st March 2026” ;

(ii) after sub-paragraph (c) insert—

(d) the year commencing on 1st April 2026 is the amount specified for that authority in the table in Schedule 8;

(e) a year commencing on or after 1st April 2027 is the amount calculated in accordance with the formula—

where—

“ A ” is the baseline funding level for the preceding year;

“ B ” is the consumer prices index for September of the preceding financial year;

“ C ” is the consumer prices index for September of the financial year which precedes that preceding the year concerned.

(b) after paragraph (4) insert—

(5) In this regulation, “ consumer prices index ” means the all items consumer prices index published by the Statistics Board, a body corporate established by section 1 of the Statistics and Registration Service Act 2007 .

Section 17 Amendment of regulation 6

In regulation 6 (individual levy rates and safety net thresholds)—

(a) in paragraph (2A) for “a relevant year commencing on or after 1st April 2017” substitute “a relevant year falling within the period beginning with 1st April 2017 and ending with 31st March 2026” ;

(b) in paragraph (2C) for “a relevant year beginning on or after 1st April 2017” substitute “a relevant year falling within the period beginning with 1st April 2017 and ending with 31st March 2026” ;

(c) in paragraph (2E) for “a relevant year beginning on or after 1st April 2019” substitute “a relevant year falling within the period beginning with 1st April 2019 and ending with 31st March 2026” ;

(d) in paragraph (2H) for “a relevant year beginning on or after 1st April 2021” substitute “a relevant year falling within the period beginning with 1st April 2021 and ending with 31st March 2026” ;

(e) at the beginning of paragraph (3) for “An authority’s” substitute “Subject to paragraph (3A), an authority’s” ;

(f) after paragraph (3) insert—

(3A) For the relevant year beginning with 1st April 2026, an authority’s safety net threshold is 100% of its baseline funding level for that year.

Section 18 Amendment of regulation 10

In regulation 10 (requirement to make levy payment)—

(a) in the opening words of paragraph (1), for “a year” substitute “a relevant year ending on or before 31st March 2026” ;

(b) in paragraph (2), after “levy payment” insert “under paragraph (1)” ;

(c) after paragraph (2) insert—

(3) Subject to paragraph (8), an authority must make a levy payment to the Secretary of State in respect of a relevant year beginning on or after 1st April 2026 if its retained rates income for the year is greater than its baseline funding level for the year.

(4) The amount of the levy payment under paragraph (3) is the sum of the amounts calculated under paragraphs (5) to (7).

(5) The amount calculated under this paragraph is 10% of so much of an authority’s retained rates income which exceeds its baseline funding level but does not exceed its initial growth limit.

(6) The amount calculated under this paragraph is 30% of so much of an authority's retained rates income which exceeds its initial growth limit but does not exceed its further growth limit.

(7) The amount calculated under this paragraph is 45% of so much of an authority’s retained rates income which exceeds its further growth limit.

(8) Paragraphs (3) to (7) do not apply to an authority listed in Parts 1 to 8 of Schedule 3 that is not part of a pool of authorities for the relevant year.

(9) In this regulation—

(a) an authority’s initial growth limit is 110% of its baseline funding level;

(b) an authority’s further growth limit is 200% of its baseline funding level.

Section 19 Amendment of Schedule 1

In Schedule 1 (calculation of retained rates income), before paragraph 1 insert—

Application

(A1) This Schedule applies in relation to a relevant year ending on or before 31st March 2026.

Section 20 Insertion of Schedules 1ZA, 8 and 9

(1) After Schedule 1 insert Schedule 1ZA which is set out in Schedule 2 to these Regulations.

(2) After Schedule 7 insert—

(a) Schedule 8 which is set out in Schedule 3 to these Regulations; and

(b) Schedule 9 which is set out in Schedule 4 to these Regulations.

Section 1 Application

This Schedule applies in relation to a relevant year beginning on or after 1st April 2026.

Section 2 Calculation for billing authorities

(1) The retained rates income of a billing authority is the amount calculated in accordance with the formula—

where—

“ K ” is—

50% where the billing authority is a county council, or is a district council in an area for which there is no county council, and the authority is a fire and rescue authority;

49% where the billing authority is a county council, or is a district council in an area for which there is no county council, and the authority is not a fire and rescue authority;

40% where the billing authority is a district council in an area for which there is a county council;

30% where the billing authority is a London borough council or the Common Council of the City of London;

“ L ” is the authority’s certified non-domestic rating income for the relevant year;

“ M ” is the amount calculated in accordance with sub-paragraph (3);

“ N ” is the amount calculated in accordance with sub-paragraph (2);

“ O ” is the amount calculated in accordance with sub-paragraph (4);

“ P ” is—

unless paragraph (b) applies, the amount paid to the authority by the Secretary of State for the relevant year in accordance with Part 5 of Schedule 7B to the 1988 Act (principal payments in connection with local retention of non-domestic rates);

for the relevant year beginning on 1st April 2026, where the billing authority is listed in Parts 2 to 8 of Schedule 3, the amount specified for that authority in column A of the table in Schedule 9.

“ Q ” is—

unless paragraph (b) applies, the amount paid by the authority to the Secretary of State for the relevant year in accordance with Part 5 of Schedule 7B to the 1988 Act;

for the relevant year beginning on 1st April 2026, where the billing authority is listed in Parts 2 to 8 of Schedule 3, the amount specified for that authority in column B of the table in Schedule 9.

(2) The amount calculated in accordance with this sub-paragraph is the amount which is the total of—

(a) the amounts credited to the billing authority’s collection fund income and expenditure account in the relevant year in accordance with proper practices in respect of non-domestic rates payable under sections 43 and 45 of the 1988 Act; less

(b) the amounts charged to the billing authority’s collection fund income and expenditure account in the relevant year in accordance with proper practices in respect of non-domestic rates payable under sections 43 and 45 of the 1988 Act.

(3) The amount calculated in accordance with this sub-paragraph is the amount that would have been calculated in accordance with sub-paragraph (2) if, in respect of any day in the relevant year or any day in a preceding year, any determination under section 47 or reduction or remission under section 49 of the 1988 Act had not been made.

(4) The amount calculated in accordance with this sub-paragraph is the amount which is the total of—

(a) the difference between the amount calculated in accordance with sub-paragraph (3) and the amount which would be so calculated if a determination under section 47 of the 1988 Act where one or more of the following applies in relation to the hereditament to which the determination relates were taken into account—

(i) the ratepayer is a charity or trustees for a charity, and the hereditament is wholly or mainly used for charitable purposes (whether of that charity or of that and other charities); or

(ii) the ratepayer is a registered club for the purposes of Chapter 9 of Part 13 of the Corporation Tax Act 2010 (community amateur sports clubs) and the hereditament is not an excepted hereditament and is wholly or mainly used—

(aa) for the purposes of that club; or

(bb) for the purposes of that club and of other such registered clubs;

(b) the difference between the amount calculated in accordance with sub-paragraph (3) and the amount which would be so calculated if a determination under section 47 of the 1988 Act where one or more of the following applies in relation to the hereditament to which the determination relates were taken into account—

(i) the hereditament is not an excepted hereditament, and all or part of it is occupied for the purposes of one or more institutions or other organisations none of which is established or conducted for profit and each of whose main objects are charitable or are otherwise philanthropic or religious or concerned with education, social welfare, science, literature or the fine arts;

(ii) the hereditament is not an excepted hereditament, it is wholly or mainly used for purposes of recreation, and all or part of it is occupied for the purposes of a club, society or other organisation not established or conducted for profit;

(iii) the hereditament meets the following conditions—

(aa) that the hereditament is within a settlement identified in the billing authority's rural settlement list for the relevant year; and

(bb) that the rateable value of the hereditament shown in the local non-domestic rating list at the beginning of the relevant year is not more than £16,500;

(c) the difference between the amount calculated in accordance with sub-paragraph (3) and the amount which would be so calculated if, in respect of any day in the relevant year or any day in a preceding year, any reduction or remission by the authority under section 49 of the Act were taken into account; and

(d) the amount of any grant paid to the authority under section 31 of the Local Government Act 2003 in relation to any determination by the authority under section 47 of the 1988 Act in respect of any day in the relevant year or any day in a preceding year.

(5) In calculating the values in paragraphs (2) to (4) there is to be disregarded in relation to the billing authority and for each relevant year the proportion of the authority’s non-domestic rating income calculated in respect of an area which has been designated in regulations made under paragraph 39(1) of Schedule 7B to the 1988 Act within which all or part of the authority’s area falls.

(6) For the purposes of this paragraph “ excepted hereditament ” has the meaning given by section 47(9) of the 1988 Act.

Section 3 Calculation for major precepting authorities

The retained rates income of an authority that is a major precepting authority is the amount calculated in accordance with the formula—

where—

“ R ” is the sum of the certified non-domestic rating income of all billing authorities required to make payments to the major precepting authority for the relevant year under Part 4 of Schedule 7B to the 1988 Act (payments by billing authorities to major precepting authorities);

“ S ” is—

10% where the relevant authority is a county council which is a fire and rescue authority;

9% where the relevant authority is a county council which is not a fire and rescue authority;

37% where the relevant authority is the Greater London Authority;

1% where the relevant authority is a fire and rescue authority not falling within paragraph (a);

“ P ” is the amount paid to the authority by the Secretary of State for the relevant year in accordance with Part 5 of Schedule 7B to the 1988 Act (principal payments in connection with local retention of non-domestic rates);

“ Q ” is the amount paid by the authority to the Secretary of State for the relevant year in accordance with Part 5 of Schedule 7B to the 1988 Act.

Section 4 Calculation for pools

The retained rates income of a relevant authority that is a pool of authorities is the sum of the retained rates income of all the authorities in the pool.