The Non-Domestic Rating (Definition of Qualifying Retail, Hospitality or Leisure Hereditament) Regulations 2025
The Non-Domestic Rating (Definition of Qualifying Retail, Hospitality or Leisure Hereditament) Regulations 2025, enacted by the Treasury under the Local Government Finance Act 1988, sets out the precise criteria for classifying hereditaments in England and Wales as 'qualifying retail, hospitality or leisure hereditaments' starting April 1st, 2026, enabling them to benefit from a potentially lower business rates multiplier; this classification depends on the property being used wholly or mainly for specified public-facing retail, hospitality, cultural, or recreational purposes while explicitly excluding those used primarily for financial, medical, professional services, or large-scale storage and distribution.
Arguments For
Provides a specific, legally defined scope for applying a lower business rates multiplier, targeting relief specifically toward retail, hospitality, and leisure sectors.
Ensures clarity and consistency across local authorities regarding which properties qualify for preferential treatment under the Local Government Finance Act 1988.
Addresses modern business operation by allowing hereditaments with majority online sales to remain eligible, provided there is in-person public engagement.
Explicitly excludes sectors like financial, medical, and professional services, thereby narrowing the intended relief only to the specified sectors.
Arguments Against
Implementation complexity arises from the detailed definitions and the need for local authorities to interpret 'wholly or mainly' usage and 'visiting members of the public'.
The exclusion list (Schedule 1) might inadvertently exclude borderline businesses that provide ancillary services to the public but fall under excluded professional or financial categories.
The regulations apply only to England for commencement purposes (Regulation 1(3)), potentially creating disparity if similar relief structure is not uniformly applied in other UK jurisdictions.
The provisions regarding online sales (Regulation 3(2)) create administrative difficulty in verifying the balance between online commerce and physical footfall to maintain qualification status.
The Treasury make these Regulations in exercise of the powers conferred by section 143(1) and (2) of, and paragraph 10(9C) of Schedule 4ZA to, the Local Government Finance Act 1988.
The Treasury created these procedural rules using authority granted by specific subsections of the Local Government Finance Act 1988 concerning business rates.
Citation, commencement, extent and application 1. (1) These Regulations may be cited as the Non-Domestic Rating (Definition of Qualifying Retail, Hospitality or Leisure Hereditament) Regulations 2025.
This regulation establishes the official title of the legislation as the Non-Domestic Rating (Definition of Qualifying Retail, Hospitality or Leisure Hereditament) Regulations 2025.
(2) These Regulations come into force on 1st April 2026.
These regulations officially become active and legally binding on April 1st, 2026.
(3) These Regulations extend to England and Wales and apply in relation to England only.
The legislation covers both England and Wales geographically, but its operational application and enforcement only apply within England.
Qualifying retail, hospitality or leisure hereditament 2. For the purposes of paragraph 10(9B) of Schedule 4ZA (occupied hereditaments: chargeable amount) to the Local Government Finance Act 1988, a “qualifying retail, hospitality or leisure hereditament” means a hereditament that— (a) is used wholly or mainly for one or more of the qualifying purposes specified in regulation 3, and (b) is not used wholly or mainly for one or more of the purposes specified in Schedule 1.
This defines which property qualifies for specific business rate treatment under the Local Government Finance Act 1988.
A property must be used primarily for purposes listed in Regulation 3, while simultaneously not being used primarily for any purpose listed in Schedule 1.
Qualifying purposes 3. (1) The qualifying purposes referred to in regulation 2(a) are— (a) use for— (i) the retail sale or hire of goods, or (ii) the provision of a service, where the sale, hire, or provision of the service is to visiting members of the public; (b) use for the sale of food or drink, where the food or drink is for consumption on or off the hereditament by visiting members of the public; (c) use as a hotel or as a boarding or guest house by members of the public, provided that no significant element of nursing care is provided as part of the services provided by the hotel, boarding house or guest house; (d) use as a caravan park, campsite, self-catering accommodation or holiday home by members of the public; (e) use for the provision of cultural, community or recreational facilities, to visiting members of the public, as further described in Schedule 2.
This section details uses that qualify a property, generally requiring transactions or services to be provided to members of the public who physically visit the site. Qualifying activities include general retail/services, food/drink sales for on or off-site consumption, public accommodation (excluding those providing significant nursing care), holiday accommodations like caravan parks, and cultural/recreational activities listed in Schedule 2.
(2) A hereditament does not cease to be used wholly or mainly for a purpose set out in paragraph (1) if the majority of sales by the business using that hereditament take place online, provided that some goods, food or drink are sold, or services or other facilities are provided, by the business to members of the public visiting the hereditament in person.
A property maintains its qualifying status even if most of its sales are conducted online, as long as the business still serves some members of the public face-to-face at the physical premises.
(3) In determining for the purposes of this regulation whether a hereditament is used by visiting members of the public, it is irrelevant that access to the hereditament may be limited (at all times or at particular times) to members of the public who— (a) have paid to access the hereditament, (b) have tickets or passes allowing access, or (c) are members or guests of a club, association or similar body.
When assessing if the 'visiting members of the public' criterion is met, the rules ignore restrictions based on payment, ticketing, or membership status of guests accessing the property.
Schedule 1 Excluded purposes Regulation 2(b) Financial services
- Use for the provision of— (a) financial, investment or insurance services, including any activity which is a regulated activity for the purposes of the Financial Services and Markets Act 2000, (b) loans or any other form of credit to consumers, (c) cash withdrawal and other services, provided through automatic teller machines, or (d) money service business (within the meaning given by regulation 3 of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017).
Schedule 1 lists uses excluded from qualifying status.
This includes the provision of financial services such as regulated investment/insurance activities, consumer credit services, or operations involving ATMs and money service businesses.
Medical or health services 2. Use for the provision of medical or health services, including use for the provision of— (a) any services which are primary medical services for the purposes of Part 4 of the National Health Service Act 2006, (b) dentistry and dental services, (c) audiology and hearing services, (d) cosmetic surgery, (e) physiotherapy, (f) osteopathy or chiropractic services, (g) acupuncture, or (h) herbal medicine.
Properties primarily providing medical or health services are excluded from qualification.
This ban covers NHS primary services, dental care, audiology, cosmetic surgery, physiotherapy, osteopathy, chiropractic services, acupuncture, and herbal medicine.
Professional services 3. Use for the provision of professional services, including use for the provision of— (a) legal services, including reserved legal activities as defined by section 12 of the Legal Services Act 2007, (b) accountancy services, including tax advice, (c) management consultancy, (d) engineering services, (e) architectural or surveying services, (f) veterinary services, (g) estate agency work (within the meaning of section 1(1) of the Estate Agents Act 1979), or (h) letting agency work (within the meaning of section 86 of the Consumer Rights Act 2015).
Services provided by regulated professionals are excluded from the qualifying definition.
This covers legal aid, accountancy, management consulting, engineering, architecture, surveying, veterinary practices, and both estate agency and letting agency work.
Miscellaneous 4. Use— (a) for storage and distribution of goods for online sale, (b) for the production or recording of music, audio or film for business or professional use, (c) as a crematorium (within the meaning of section 2 of the Cremation Act 1902), (d) for the operation of a vehicle hire service with drivers, (e) as a display property to demonstrate the design and features of new homes for sale, (f) as premises for the hosting of meetings or conferences, (g) as a betting shop, (h) as a postal sorting office, (i) as a citizens’ advice bureau, (j) as a job centre, (k) as a marina, wharf, pier or jetty, (l) as a car park, or (m) as premises for the provision of public transport, other than bicycle docking stations, including— (i) a bus or coach station, (ii) a bus shelter or tram shelter, (iii) a railway station, (iv) a tramway station, (v) an airport or ferry port, and (vi) a riverboat service, including any piers used for the purposes of that service.
A variety of other specific uses are excluded from qualification under Schedule 1, Item 4.
Exclusions include online logistics, professional media production, crematoria, driver-operated vehicle hire, property show homes, general meeting venues, betting shops, postal sorting offices, job centres, transport hubs (like marinas or car parks), and most forms of public transport premises.
Schedule 2 Cultural, community or recreational facilities Regulation 3(1)(e)
- For the purposes of regulation 3(1)(e), cultural, community or recreational facilities include the facilities specified in the following paragraphs.
Schedule 2 lists specific facilities that count towards the 'cultural, community or recreational' qualifying purposes mentioned in Regulation 3(1)(e).
- Live music venues.
Live music venues qualify as a cultural or recreational facility.
- Nightclubs.
Nightclubs are included within the definition of qualifying recreational use.
- Cinemas.
Premises used as cinemas qualify under these rules.
- Theatres.
Theatres qualify as part of the permitted cultural facilities.
- Libraries, museums or galleries, including— (a) archives, and (b) sites where a collection of objects or works (or a single object or work) considered to be of scientific, historic, artistic or cultural interest is exhibited outdoors, or partly outdoors.
Libraries, museums, and galleries qualify, including archives and outdoor exhibition sites holding items of cultural or scientific value.
- Stately homes, historic houses and other visitor attractions of cultural, historic, touristic or educational value.
Stately homes, historic houses, and other attractions valued for cultural, historical, tourism, or educational reasons are included.
- Tourist information centres.
Tourist information centres are listed as qualifying facilities.
- Public halls and venues for hire for events or activities, where the events and activities are principally for the benefit of visiting members of the public, and other premises used wholly or mainly for meetings by voluntary associations.
Public halls or hired venues qualify if their events primarily benefit the visiting public, as do premises used mainly for voluntary association meetings.
- Premises used by youth groups for meetings and activities, such as scout huts.
Huts or premises used by youth organizations like Scouts for meetings and activities are defined as qualifying community facilities.
- Premises used for lectures or lessons undertaken for recreational purposes, including language lessons, music and dance lessons, or pottery and arts lessons.
Facilities hosting recreational learning, such as lessons in languages, arts, music, or dance, are considered qualifying uses.
- Sports grounds (within the meaning of section 17(1) of the Safety of Sports Grounds Act 1975), sports clubs, gyms and other sport and leisure facilities.
This includes sports grounds, clubs, gyms, and general sport/leisure facilities, referencing the definition under the Safety of Sports Grounds Act 1975.
- Health spas and massage parlours.
Health spas and massage parlours are explicitly included within the scope of recreational facilities.
- Casinos, gambling clubs and bingo halls.
Casinos, gambling clubs, and bingo halls are defined as qualifying premises.
- Theme parks, soft play centres, and recreational centres for activities such as bowling, laser tag, paintballing, escape rooms or miniature golf.
Recreational centres offering activities such as theme parks, soft play, bowling, paintballing, laser tag, escape rooms, or miniature golf are included.
Explanatory Note (This note is not part of the Regulations) These Regulations provide a definition for the term “qualifying retail, hospitality or leisure hereditament” for the purposes of determining whether a lower multiplier may be applied to calculate the business rates due in relation to the hereditament in question. Local authorities multiply the rateable value of a business property with a multiplier set by central government to calculate the amount due in business rates. The definition is intended to ensure that the lower multiplier is only used for businesses within the retail, hospitality or leisure sectors. An impact assessment has not been produced for this instrument because it amends an existing local tax regime. Publication of a full impact assessment is not necessary for such legislation.
The explanatory note clarifies that the purpose of these rules is to define which properties qualify for a reduced business rates multiplier used by local authorities.
The government decided not to produce a full impact assessment because the legislation only modifies an existing local tax system.