Private schools brace for rates rise after Scottish tax relief cuts
Private schools are to be taxed full business rates next year, the Scottish government has confirmed with less than a year to go before the changes come into effect.
The announcement means the schools will no longer get relief of up to 80% on their bills for non-domestic rates.
The policy, now set to become law, has been extremely controversial since it was recommended three years ago in The Barclay Review of independent schools.
With only 48 hours to go to the polls this Thursday The Labour Party has pledged to follow suit in England and Wales by axing the same tax break. Its manifesto, however, stopped short of promising to abolish private schools altogether, as voted for by party members at September’s party conference.
Regardless of which political party takes the keys to No 10 on Friday, Scotland will see the change come into effect on 1 September next year.
Independent schools have calculated they could be hit by a £37m bill in the first five years of the new system, meaning either school fees will have to rise steeply or current bursaries and scholarships for less well-off pupils would be cut. Currently there are 51 private schools across Scotland, including Royal favourites such as Gordonstoun and Fettes.
Public finance minister Kate Forbes said the new law would be incorporated into the Non-Domestic Rates (Scotland) Bill, currently in its second stage. Under the legislation, schools would lose their charity relief unless they were responsible for teaching children with additional support needs. Whether this turns into a full blown loophole for schools which offer some special education provision remains to be seen.
London Mayor Sadiq Khan is the latest big name to call on the government to extend the business rates holiday beyond April 2021.
The retail and hospitality sectors are mobilising the troops with dire warnings that thousands of business are at risk if the rates holiday isn’t extended beyond April 2021.
The pandemic has led to more than 50,000 extra appeals being lodged against business rates by Scottish firms alone.