The world's top two drivers were also warned about their future conduct, after the incident when Hill collided with Schumacher as the British driver attempted to overtake, forcing both into the gravel trap.
Surprisingly, the stewards said both drivers were partially responsible for the collision, despite the general view that Hill had been at fault. The decision was taken after hearing reports from both drivers and reviewing video replays. Both were told that future actions could result in severe penalties.
McLaren's Mark Blundell and Rubens Barrichello of Jordan were also reprimanded for their private battle, which also ended with a collision. Blundell finished fifth, while Barrichello span off.
Hill's exit on lap 46 was a disappointment for the 90,000 strong home crowd, but they willingly stood in the rain to acclaim Johnny Herbert as a Formula One winner at last.
The spectators were braced for Hill's attack on Schumacher and when it came, both men were put out of the race. Hill, a mite too anxious to seize the initiative, lunged into a momentary gap that was never going to accommodate his Williams-Renault and speared the German's Benetton-Renault. The two cars spun backwards in formation into the gravel outside Priory.
Schumacher, still leading Hill by 11 points in the championship standings, called it a "crazy manoeuvre". He went on: "I am very angry with him. I don't know what he was trying to do. It was really stupid to spoil a nice race.
"I was never worried he would get past. I understand he wanted to win his home grand prix very badly, but this was totally unnecessary. I couldn't expect him to try it there because there is no room for two cars and he could not hope to overtake."
A contrite-looking Hill gave an unconvincing defence of his manoeuvre. He said: "We were having a great, exciting race. I thought I saw an opportunity to go through, but Michael is a harder man to pass than that. It was a racing accident."
From the ashes of Hill's aspirations rose two new British heroes in the supporting Benetton and Williams cars. Herbert, to his astonishment, found himself in the lead, although pursued by David Coulthard.
Fifteen laps remained and Coulthard closed in, only to peer up at one of the giant screens here to be informed he had incurred a 10-second stop and go penalty for speeding in the pit lane. He mustered the defiant gesture of overtaking Herbert before Williams confirmed the worst. Coulthard later explained that an electrical failure had put his speed indicator out of commission.
The Benetton driver was also aware of the impending punishment and offered no resistance. Herbert's remaining concern was the Ferrari of Jean Alesi looming in his wing mirrors and the menacingly dark clouds drifting overhead.
But this was the day he ensured his luck changed. He constrained his raging emotions, sustained his pace and for once Alesi's resolve was broken. Coulthard finished third.
So, after the weeks of moans, accusations and recriminations, a tender story to touch the hearts of the most cynical. Coulthard graciously swallowed his disappointment to reflect the universal joy at Herbert's victory. The young Scot and Alesi hoisted the winner on their shoulders so that he might savour the full glory of the occasion. All weekend the paddock had been rife with rumours that Herbert's place at Benetton was in peril. At best it was suggested he would be released at the end of the year.
Some predicted he could be dropped after this race; dispensed with mid- season just as he was by the same team in 1989. That was his first season in Formula One - a season he started against all odds. The previous summer he had smashed his feet in a Formula 3000 accident at Brands Hatch. There were fears one of them might have to be amputated.
Herbert has waited 71 races for his maiden grand prix win, but then Nigel Mansell took 72 and Alesi 91. The Frenchman gave Herbert the benefit of his recent experience, saying: "Now you will have it easy - and two or three mornings of headaches!"
That is a discomfort he will gladly endure. "It has been a long hard slog," Herbert said. "When I had the accident, it was touch and go if I could go on. I always believed I would do it and I still don't think I've done enough. I haven't heard anything about being thrown out of the team, and a win doesn't guarantee anything."
It is ironic that after all the condemnations of refuelling for breaking up races, Hill's second stop proved the catalyst for the thriller he predicted.
He built up an early lead as Schumacher looked in vain for a way past Alesi, who catapulted his Ferrari from sixth on the grid to second. But Schumacher again had the strategy to work himself ahead. He stopped only once and appeared to be in control.
The duel for fourth place was also terminated by a collision, Barrichello's Jordan Peugeot running into Blundell's McLaren Mercedes. The Brazilian's crippled car careered off the track and although Blundell made it to the line on three wheels, he was passed by Olivier Panis's Ligier Mugen.
BRITISH GRAND PRIX
1 J Herbert (GB) Benetton-Renault 1hr 34min 35.093sec
2 J Alesi (Fr) Ferrari +16.479sec
3 D Coulthard (GB) Williams-Renault +23.888
4 O Panis (Fr) Ligier-Mugen Honda +1:33.168; 5 M Blundell (GB) McLaren- Mercedes +1:48.172; 6 H-H Frentzen (Ger) Sauber-Ford Zetec +1; 7 P Martini (It) Minardi-Ford; 8 M Salo (Fin) Tyrrell-Yamaha; 9 J-C Boullion (Fr) Sauber-Ford Zetec; 10 L Badoer (It) Minardi-Ford; 11 R Barrichello (Bra) Jordan-Peugeot; 12 B Gachot (Bel) Pacific-Ford +3 laps.
Not classified: R Moreno (Bra) Forti -Ford 48 laps completed; M Schumacher (Ger) Benetton-Renault 45; D Hill (GB) Williams-Renault 45; M Papis (It) Footwork-Hart 28; U Katayama (Japan) Tyrrell-Yamaha 22; A Montermini (It) Pacific-Ford 21; M Hakkinen (Fin) McLaren-Mercedes 20; G Berger (Aut) Ferrari 20; M Brundle (GB) Ligier-Mugen Honda 16; T Inoue (Japan) Footwork- Hart 16; P Diniz (Bra) Forti-Ford 13; E Irvine (GB) Jordan-Peugeot 2.
World drivers' championship (after eight races): 1 Schumacher 46pts; 2 Hill 35; 3 Alesi 32: 4 Herbert 22; 5= Berger, Coulthard 17. Other GB: 9 Irvine 6; 10= Blundell, Brundle 3.
Constructors' championship: 1 Benetton 58; 2 Ferrari 49; 3 Williams 46; 4 Jordan 13; 5= McLaren, Ligier 10.Reuse content