Welsh Government to consult on removing charitable rates relief for private schools and hospitals

During Welsh Assembly questions (full transcript below) on the Welsh Government’s policy in relation to developing taxation measures, the Welsh Government has confirmed that it plans to consult on removing charitable rate relief for private schools/hospitals. Following the Barclay Review the Scottish Government plans to remove charitable rates relief for private schools.

CTG has always argued that eligibility for charitable tax reliefs should avoid targeting in this way – if there are concerns about certain organisations receiving reliefs it should be an issue of charity law and public benefit, not addressed through changes to the tax system. Otherwise this risks creating a dangerous precedent with other tax reliefs being restricted to “preferred charities”.

Developing Welsh Taxation measures

John Griffiths AM asked:

Minister, taxation powers offer the opportunity to introduce change to the tax system to help create a fairer and more equal Wales. At the moment, private schools sustain an institutionalised unfairness and inequality, working against social mobility by entrenching educational inequality that feeds through to careers and life chances, with ex-private school pupils disproportionately featuring at the top of professions and businesses. Will you carefully consider ending the tax advantages of charitable status for private schools to further equality of opportunity and outcome in Wales?

Rebecca Evans AM, Minister for Finance and Trefnydd responded:

Thank you very much for that question. Of course, fairness is our No. 1 principle in the tax principles that are guiding us in terms of the development of our tax policy in Wales. I can confirm that I do intend to consult over the next 12 months on proposals to place independent schools and private hospitals on an equal footing with their public sector counterparts in respect of the payment of non-domestic rates. The consultation will consider removing charitable rate relief from private schools and private hospitals where they’re registered as charities. State schools and hospitals, of course, are obliged to pay non-domestic rates, as are all other ratepayers, and this is an important contribution to the cost of the vital local services that are delivered in our communities. So, this brings in the question of equality, which you’ve mentioned, alongside fairness—if we do change the eligibility of these institutions as a result of the consultation, it will put them on an equal footing with the state schools and hospitals.