Non-Domestic Rates (Scotland) Bill backed by Local Government and Communities Committee

The Scottish Parliament’s Local Government and Communities Committee has given its backing to the Non-Domestic Rates (Scotland) Bill which proposes reform of non-domestic rates in Scotland. The Committee’s debate can be viewed here. Section 10 of the Bill removes eligibility to claim charitable relief from non-domestic rates from mainstream independent schools.

The Charity Tax Group responded to the Committee’s call for evidence jointly with the Charities’ Property Association (CPA). The response highlighted concerns (shared by OSCR) that removal of rates relief for mainstream independent schools in Scotland risks the creation of a two-tier status for charities with tax reliefs applicable only to the most “deserving charities”.

On this point, the Committee’s Convener James Dornan MSP, said: “We recognise the strength of feeling from the independent school sector about the Bill’s proposal to remove charitable rates relief from them. However, we believe this will level the playing field with state schools and generate vital funds for local authorities at a time of increasing demand on their services. And it is important to note that this Bill is not just about this single issue.”

The Committee’s report, states that: “A majority of the Committee supports section 10 of the Bill, by virtue of which mainstream independent schools will no longer be able to claim charitable relief. The Committee agrees that this change is necessary to create a “level playing field” between the state and independent sectors. It will also generate more revenue for councils to spend on services for citizens. The majority accepts that there will be a financial impact on independent schools, but notes the Scottish Government’s view that on average the additional cost would equate to about 1.3% of annual fees. A minority of the Committee does not support section 10, considering the case that this would be fairer is not clearly supported by the evidence. It also has concerns about the potential negative impact of this change on the independent sector.

 “The Committee accepts the case for excepting independent special schools from the new general provision laid down in section 10. We are not persuaded that the case for treating independent specialist music schools (in practice, one school at present) any differently from any other independent schools has been clearly made. There are a number of independent and state schools that could be said to make a distinctive contribution to musical culture or in other areas, such as Scotland’s National Centres for Excellence. The Committee invites the Scottish Government to clarify whether a private nursery’s entitlement to relief is affected by whether or not it forms part of an independent school estate and if so, whether this is how the relief was intended to operate.”