Private schools but not nurseries could be subject to business rates after review

Written by Tom Freeman on 22 August 2017 in News

Barclay review of business rates recommends 

George Heriot's school - creative commons

Private schools and universities could face bills for business rates after an independent review recommended an overhaul of the system.

The review into non-domestic rates was set up by the Scottish Government last year to look for ways to make the system fairer whilst also encouraging business growth.

It was chaired by former RBS chairman Ken Barclay.


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Although the report recognised “no strong appetite for a significant overhaul” of the current property-based tax system, it did make a number of recommendations.

These include bringing private schools, universities and leisure centres currently exempt from the tax into the business rates system, while taking childcare centres out.

Private schools are currently exempt because of their charitable status while state schools do pay rates.

Universities are also charities but the Barclay review suggests they should pay rates on the business use of their properties, such as the letting of student halls outwith term time.

It also said targeted reductions in certain bills would keep struggling town centres open and recommended a reduction of the controversial Large Business Supplement from 2.6p to 1.3p.

Launching the report Barclay said it was not about penalising certain sectors.

“Any well-functioning tax needs to rely on principles of fairness,” he said.

He suggested tax relief in the form of a business growth accelerator would encourage businesses to expand, while businesses should have more frequent revaluations to help “reduce shocks to the system”.

He added: “Our review group has used all the information and expertise available to us to produce this report, and are confident that the measures proposed can create tangible improvements.”

Finance Secretary Derek Mackay said the Scottish Government will “respond quickly” to the recommendations.

The Federation of Small Businesses said the recommendations were “sensible” while the Scottish Retail Consortium said the report has “identified a path towards a better rates system”.

However Scottish Green finance spokesperson Patrick Harvie said the proposals lacked bold ideas such as the devolution of 50 per cent of the rate to councils or turning it into a land value tax.

“While any analysis on non-domestic rates is welcome, it should be remembered that the Barclay Review has a very narrow focus and only asks how to reform the system as it exists. Greens are pushing for bold reform of local taxation to put public services on a firm financial footing,” he said.

The Scottish Liberal Democrats have also called for a tax on land value.

The party’s economy spokesperson Councillor Carolyn Caddick said: “The review misses the opportunity for radical changes that would benefit Scottish business. We could have moved to a system of land value taxation which would have avoided the big rate increases that Scottish businesses face when they improve their property with renewable energy or sprinkler systems. All Barclay does is ask for a further review.

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