Natural History Museum wins landmark business rates challenge

The Natural History Museum (NHM) has become the first national museum in the UK to win a landmark legal challenge to reduce its business rates.

Following a complex case heard over two days in February this year, the Valuation Tribunal for England ruled in March that the museum should have a nominal rateable value of £1 in the 2017 Rating List, effective from 1 April 2017.

Initial work on appealing that decision has been abandoned, ensuring the decision stands.

The museum was originally assessed by the Valuation Officer at £12.92m in the 2017 Rating List. This was reduced to £4.16m on the Contractor’s Basis, which calculates the contemporary rebuild cost of the property.

However, a legal precedent set by Stephen G Hughes v Exeter City Council/Royal Albert Memorial Museum in 2020 established that, as non-profit institutions with high operating costs, museums should be valued using the Receipts and Expenditure (R&E) method, which considers whether the property makes a net surplus.

In the Trustees of the Natural History Museum v Valuation Officer, the NHM argued that its correct rateable value should be £1, in line with established case law that the rateable value should be nominal as “no commercially motivated person” would take such a letting.

The tribunal accepted the argument that a museum that operates at a loss to preserve collections and remain open to the public, and should not be valued as though it were a profitable commercial property because no commercial tenant would take on the building on those terms.

The judgment will result in significant backdated savings for the NHM and provide a potentially important route for other museums and public bodies to reassess and challenge their own rating liabilities.

A statement from Mills & Reeve, which acted for the NHM, said: “Crucially, it was established that the tribunal will not inflate valuations through socioeconomic arguments, storage analogies or speculative adjustments under the R&E method and that actual financial performance is crucial.”

Helen Whitehouse, the chief operating officer of the Natural History Museum, said: “This is another important business rates ruling for the museums sector which is already facing significant headwinds given the wider backdrop and long-term pressure on finances.

“This is a positive decision, which reflects the economic realities of a museum’s accounts and the common-sense evaluation that we are the only realistic tenant for the building we occupy – this is the case for many, if not all, museums who are charities and/or public bodies like ours.”

The Mills & Reeve team included real estate disputes partner Richard New, Stefano Frullini and Hannah Prew.

Commenting on the judgment, New said: “This latest continues a strong line of authority establishing that museums operating at a loss cannot attract a positive value for rating purposes.

“It was agreed the correct valuation approach was the Receipts and Expenditure (R&E) method, in line with three Upper Tribunal cases regarding regional museums. 

“This means where a museum’s mode of occupation is inherently loss making, the hypothetical rent – and therefore the rateable value – must be nil or nominal as the Natural History Museum’s own accounts clearly demonstrated an inability to trade profitably. This led to the Valuation Tribunal for England reducing the rateable value from £12.9m to £1.

“As well as being the UK’s most popular visitor attraction in 2025, the Natural History Museum uses its unique collections and expertise to tackle the biggest challenges facing the world today – it’s a hugely valuable asset to the UK. We’re thrilled to have been able to play a role which will have a positive impact on the Natural History Museum and the wider sector.”

Mills & Reeve provided legal representation for the case. Cain Ormondroyd of Francis Taylor Buildings appeared for NHM, with Colin Hunter as expert witness. Powis Hughes Limited were the NHM’s agents for the appeal.

Case law

The NHM’s appeal follows three landmark Upper Tribunal (Lands Chamber) cases involving regional museum services:

• York Museums and Gallery Trust (2017) established an early precedent. The Upper Tribunal determined that the Contractor’s Basis was not appropriate for a loss-making museum.
• Stephen G Hughes v Exeter City Council / Royal Albert Memorial Museum (2020) saw the Upper Tribunal rule that the museum should be valued using the R&E method. Exeter City Council was supported by Arts Council England (ACE) and the National Museum Directors’ Council due to the importance of the landmark case to the museum sector.
• Allen (VO) v Tyne & Wear Archives & Museums (2022) saw the Upper Tribunal confirm nominal values for three of the museums it runs: Shipley Art Gallery, Laing Art Gallery and South Shields Museum. The tribunal firmly rejected the Valuation Officer’s argument that the socio-economic “social value” of museums to the local area should be captured in their rateable values.