Business Rates Relief Update for Private Schools

Whilst the VAT changes will affect all private schools in the UK, business rates is a devolved issue and so will only affect schools within England which have charitable status. The Government’s policy note indicates that this covers around 50% of private schools in England, whereas Scotland has levied business rates on private schools for several years. The current position is that English schools with charitable status, whether Registered or Exempt charities, are eligible for mandatory charitable rates relief of 80%, with many Local Authorities using a discretionary power to increase this relief to 100%. 

The Government has announced the intention to remove charitable business rates relief for private schools in England as from April 2025. The exact scope of the change has yet to be confirmed, with the paper noting that they will look at reducing the impact of the change in cases where private school provision has been specified for pupils through an Education, Health and Care plan (EHCP) in parallel with the proposal to nullify the net VAT impact where private school pupils with SEN are funded through Local Authority plans. The policy paper does not attempt to quantify the impact of the loss of Business rates relief, although a 2023 research report from the Institute for Fiscal Studies estimated an additional tax take of £140 million across the sector.

At this stage, the revisions to the tax status of private schools are limited to the proposals discussed above. There is no reference to the other charitable tax exemptions that schools can take advantage of such as relief from Stamp Duty Land Tax and the ability to reclaim Gift Aid on qualifying donations. 

If you wish to discuss this issue further please contact me or another member of the James Cowper Kreston Education Team.