Pre-School Education: Business Rates

It is the government’s ambition that all families have access to high-quality, affordable and flexible early education and care, giving every child the best start in life and delivering on our Plan for Change.

The small business rate relief scheme provides up to 100% relief for eligible businesses occupying one property with a rateable value of £12,000 or below, and reduced bills up to £15,000. Further, if a nursery is a charity, charitable rate relief provides 80% off rates bills, which can be topped up to 100% by the local authority.

The government funds local authorities to deliver the early years entitlements through the early years national funding formula for the 3 and 4-year-old entitlement and a separate formula for the 2-year-old and below entitlement. The hourly funding rate paid to local authorities for these entitlements is designed to recognise the average costs across different provider types and is intended to reflect staff and non-staff costs, including business rates. In 2025/26 alone, the department plans to provide over £8 billion for the early years entitlements, an additional £2 billion (over 30% increase) compared to 2024/25, as we roll out the expansion of the entitlements.

There are no current plans to extend the centralised payment system to private, voluntary or independent early years settings or to make these settings exempt. However, all processes are kept under review.