Private schools could lose charitable status as MSPs to review business rates

Derek Mackay's bill recommends independent schools should no longeer be able to claim charitable relief. Picture: Lisa Ferguson.
Derek Mackay's bill recommends independent schools should no longeer be able to claim charitable relief. Picture: Lisa Ferguson.
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Proposals to remove the charitable status of independent schools will be heard in parliament as Holyrood prepares a review of business rates.

The Scottish Parliament is considering reforming the system and is now calling for feedback from the public on the plans.

Non-domestic rates are levied on business properties, determined by the assessed value of the building, and are the second-highest source of tax income for the Scottish Government.

READ MORE: Private Schools face £37m bill

After a review into the system by former RBS chief Ken Barclay, which made recommendations to reform non-domestic rates, a Bill has been introduced in the Scottish Parliament. It proposes carrying out valuations every three years, rather than the current five years, and tackling known tax avoidance, including tactics involving unoccupied or under-used properties.

The Bill, put forward by Economy Secretary Derek Mackay, also recommends independent schools should no longer be able to claim charitable relief, which would amount to £37 million between 2020 and 2025, it suggests.

Under the current system, independent schools with charitable status pay 20 per cent of their rates bill, while local authorities have the discretion to charge them nothing at all.

READ MORE: Private Schools contribute over £100m to Edinburgh economy, report finds

Holyrood’s Local Government and Communities Committee will examine the impact of the Bill.

Committee convener James Dornan said: “Non-domestic rates are the second highest revenue-raising tax in Scotland and these reforms could affect a great number of people.

“We are keen to hear the views of potentially affected organisations and members of the public about the proposed changes to the system, and whether the Government has addressed the issues raised in the Barclay Review.

“We also want to know if people think anything else should be included in this Bill or if more radical reform of the system is needed.

“We look forward to hearing what the public has to say and using the evidence to ensure our inquiry is as robust as possible.”