Private schools to get £522million in tax breaks

Thursday, June 15, 2017

More than half of all private schools in England and Wales are registered as charities and receive lucrative tax breaks, our recent Freedom of Information request reveals.

Charities in England and Wales can receive charitable rate relief of 80% if a property is used for "charitable" purposes.

Under the Freedom of Information Act, all Councils were asked to provide details of tax relief given to private schools. We received replies from 132 Councils, and it revealed that 545 out of 997 private schools held charitable status and were afforded mandatory business rates relief.

The freedom of information replies showed us that, this year alone, Waverley Borough Council will grant 42 out 52 of their private schools, £4.44m in rates relief with Elmbridge Borough Council granting 34 out 54 of their private schools £2.46m in relief.

The issue of private schooling has always been a thorny one for politicians. Under the business rates shake up which can into force on 1st April this year, private schools liable for business rates have seen their property values, used to calculate the controversial tax, sky rocket by almost a fifth.

Analysis of official Government figures shows that the 2,707 properties overall classified by the Government as private schools had a combined Rateable Value of £386.58million based on the last property assessment in 2010, which has formed the basis of rates bills for the last 7 years, but this has risen by 19.63%- up £75.89million- to £462.47million.

This means that under the Revaluation of business rates, private schools could have expected to pay £1.16billion in business rates over the next 5 years, but we forecast, based upon the replies from Councils, that just £634.26million will be paid, equating to a £522.31million saving by private schools through their charitable status.

A common theme which ran through the political parties manifestos published ahead of the recent General Election was the need to reform business rates, with the promise to review the tax payable on properties given an ongoing backlash against its inequalities.

We know that revenue from the controversial business rates tax is projected to rise; £4.9billion from £28.8billion last year to £33.7billion by 2021/22 representing a 17.01% hike in revenue.

It cannot be right that state schools pay normal business rates but 56% of private schools, using charitable status, receive 80% discount. As the overall tax burden continues to rise, businesses- particularly SMEs- must have the confidence that fairness is at the heart of the tax system.

In the first Revaluation of business rates for 7 years, which came into effect at the beginning of April, the Government admits that up to 500,000 shops, cafes, restaurants and pubs have seen their bills rise.

Former Education Secretary Michael Gove has previously slammed private schools for serving the offspring of the world’s global elite whilst using their charitable status to avoid paying taxes.