PRIVATE schools will be hit with a £37 million bill over five years as a result of plans to scrap tax breaks in the sector, it has been revealed.

Legislation aimed at reforming the business rates system will see mainstream independent schools stripped of their charitable relief.

Previous estimates said this would cost the sector around £5m a year – but now documents published alongside the Non-Domestic Rates (Scotland) Bill have seen the projected costs rise substantially.

John Edward, director of the Scottish Council of Independent Schools, said the move risked seeing some smaller, rural private schools hit with bills equivalent to around £500 or £600 per pupil.

He said this would force institutions to hike fees, sell off assets such as playing fields, cut teachers or scale back means-tested assistance.

He said: “The idea that independent schools are full of the super-rich is simply not true. All of this money comes out of parents’ pockets. These schools are not-for-profit.”

Existing legislation means all independent schools are eligible for 80% mandatory rates relief if they are registered as a charity.

Local authorities then have a discretionary power to “top up” this relief, up to 100%. State schools, meanwhile, do not qualify for charitable relief.

Based on a commencement date of 2020/21, ministers said the new rules would see private schools forced to pay £7m extra in the first financial year.

This would rise to £7.2m the following year, £7.4m the year after, £7.5m in 2023/24 and £7.7m the next year, taking account of inflation. In total, schools would pay £36.9m more in the first five years. 

Private special schools and specialist independent music schools would continue to be eligible for charitable relief under the legislation.

In a financial memorandum accompanying the new Bill, which was introduced to Holyrood yesterday and will now be scrutinised by MSPs, ministers said: "Mainstream independent schools will still retain their charitable status and other benefits will continue to flow to them from that status."

But Scottish Tory shadow education secretary Liz Smith MSP said the changes made “no sense whatsoever”.

She said: “The SNP has – rightly – been at great pains to say that all schools should be much more inclusive and accessible to those from under-privileged backgrounds yet this proposed legislation would do exactly the opposite.

“It would make independent schools much more elitist and less able to offer the extensive bursary support which they have built upon over the last decade.

“The likely fee increases would push many pupils out of the independent sector into the state sector which is already struggling to cater for the needs of the existing pupil numbers, and hard pressed Scottish taxpayers would have to foot the bill.

“As well as this however, the proposed legislation is riddled with holes.

"For example, how can it be right to discriminate between pupils with additional support needs who attend a special school and pupils in an independent school who have exactly the same additional support needs?

“Likewise, this legislation would accord a private profit-making nursery relief from business rates but not a nursery that is part of a charitable foundation.

“None of this has been thought through which is why the SNP will open itself to legal challenge if it pursues this policy.”

The new legislation follows a review of business rates carried out by Ken Barclay, a former Royal Bank of Scotland chairman.

It includes measures to revalue rates every three years instead of five – making the system more flexible to changing economic circumstances.

David Lonsdale, director of the Scottish Retail Consortium, said the “archaic” rates regime was in urgent need of reform and welcomed moves to recast it. However, he said more needed to be done.