In December 2016 the Department for Education held a consultation on the future of schools.

The consultation document notes that many independent schools benefit from the state from the benefits offered by charitable status. It notes that there should be a greater expectation on these schools to assist the state-funded sector more directly, without necessarily spending more money, by building capacity in the sector through more good places and choice and control for parents.

The Government propose that independent schools with the capacity and capability should meet one of two expectations in recognition of the benefits of their charitable status:

• To sponsor academies or set up a new free school in the state sector.
• To offer a certain proportion of places as fully funded bursaries to those who are insufficiently wealthy to pay fees.

Following questions on the role independent schools can play in supporting state schools, respondents are asked:

“Should we consider legislation to allow the Charity Commission to revise its guidance, and to remove the benefits associated with charitable status from those independent schools which do not comply?”

The document is not explicit about what it is threatened, but the implication is that there would be a denial of tax reliefs (especially non-domestic rates relief) for charitable independent schools in England. CTG is always concerned at attempts to limit reliefs to “deserving charities” as this sets a dangerous precedent that could threaten to undermine the principle of charitable tax relief. We made this point in a short response to the consultation.

Separately, the Barclay Review in Scotland has proposed the withdrawal of tax reliefs for independent schools and this has been accepted by the Scottish Government. Read more here.