Forbes confirms private schools to lose right to tax breaks
PRIVATE schools will be stripped of controversial tax breaks from the start of the next academic year under plans put forward by the SNP.
Public finance minister Kate Forbes confirmed independent schools would no longer be eligible for charitable relief on their business rates from September 1 2020.
The move forms part of the Non-domestic Rates (Scotland) Bill, which is being scrutinised by MSPS at Holyrood.
It follows a review of business rates carried out by Ken Barclay, a former Royal Bank of Scotland chairman.
Private schools will be hit with an estimated £37 million bill over five years as a result of the plans, amid warnings some institutions could be forced to close.
Ms Forbes made the latest announcement while giving evidence to Holyrood’s Local Government and Communities Committee.
She said: “A September 2020 commencement date would be almost three years after the change was first recommended by the Barclay Review, and it would tie introduction to the academic year rather than the start of the financial year which should hopefully help schools with their planning for academic year 2021.
“We’ve always been clear that we will deliver this change as recommended by the Barclay Review, and I hope that confirmation of the Government’s commencement intentions will assist the sector in its ongoing planning.”
Existing rules mean all independent schools are eligible for 80 per cent mandatory rates relief if they are registered as a charity.
Local authorities then have a discretionary power to “top up” this relief, up to 100%. State schools do not qualify for charitable relief.
Based on a commencement date of 2020/21, documents published alongside the new legislation said private schools will pay £7m extra in the first financial year.
This would rise to £7.2m the following year, £7.4m the year after, £7.5m in 2023/24 and £7.7m the next year, taking account of inflation. In total, schools would pay £36.9m more in the first five years.
However, private special schools and specialist independent music schools would continue to be eligible for charitable relief. Mainstream independent schools will retain their overall charitable status.
John Edward, director of the Scottish Council of Independent Schools, previously said the move risked some smaller, rural schools being hit with bills equivalent to around £500 or £600 per pupil.