Private schools face £5m tax hike in overhaul of rates

● Ministers launch consultation drive ● ‘Out-of-town’ levy concerns

Controversial plans to hit private schools with a £5 million tax hike have taken a step forward after the Scottish Government unveiled a new consultation into the move.

Finance Secretary Derek Mackay said it is part of a package which will “strike the right balance” between a competitive tax system and raising funds for pubic services. The consultation into measures contained in the Barclay Review comes ahead of legislation expected this year to overhaul business rates.

It has already prompted concern among firms over the prospect of new taxes on “out-of-town” firms as part of a drive to revive ailing High Streets stores.

The loss of charity relief – which shaves 80 per cent off rates – means some of the country’s best-known schools like Heriot’s, Watson’s, Gordonstoun and Fettes College could face bills running into six figures.

“The Scottish Government will remove charity relief for most independent schools from April 2020 to bring independent schools into line with council schools,” the consultation states.

Bosses at fee-paying schools have previously warned Scottish education will be at a competitive disadvantage in the UK and globally. About 50 schools across Scotland will be affected. In Edinburgh, it is

0 Fettes College could face a six-figure tax hike estimated that private schools educate about 15-18 per cent of children, with Stewart’s Melville and Merchiston Castle among their number.

Retail chiefs are concerned aboutproposalstoallowcouncils to impose a new levy on out-of-town firms and those mainly operating online.

“The prospect of an additional business rates levy on firms located out of town and which operate online is alarming,” said David Lonsdale, director of the Scottish Retail Consortium. “This new business rates surcharge is at odds with the Scottish Government’s ambition of delivering a competitive rates regime, and introduces a fresh element of unpredictability.”

Mr Mackay urged firms to take part in the consultation.

“The recommendations of Barclay, alongside others in the Budget, strike the right balance between offering a competitive and sustainable taxation environment while delivering sufficient resources to fund the public services which we all rely.”