Private schools in Wales could lose their charitable status from April 2024 under new proposals set out by the Welsh Labour government.

The move would require fee-paying schools to pay domestic rates, a change expected to bring in an additional £1.3 million per year. This comes on top of UK-wide plans to impose VAT on private school fees, which will also affect Welsh schools.

Welsh finance secretary, Mark Drakeford, argued that the proposed changes would bring Wales in line with Scotland, where private schools lost charitable status in 2022, and would align with similar moves planned in England. Currently, 17 of the 83 private schools in Wales receive charitable non-domestic rates relief, which Drakeford believes creates an unfair advantage.

“We believe that independent schools with charitable status in Wales should be treated in the same way as those which are not charities,” Drakeford said, justifying the proposal as a way to redirect funds into local services.

However, concerns have been raised that these tax changes, including Sir Keir Starmer’s planned VAT on private school fees, could lead to a significant drop in private school enrolment. A recent Saltus Wealth Index report found that nearly 23% of parents might withdraw their children from private education, potentially shifting 140,000 children into state schools across England and Wales. Critics argue this would overwhelm the public education system and result in higher costs for taxpayers.

Tom Giffard, Welsh Conservative shadow education minister, criticised the proposals as short-sighted. He warned that pushing children into an already strained state school system would increase class sizes and place additional pressure on teaching staff.

The Welsh government’s consultation on removing charitable status for private schools will run for 12 weeks until December 16.

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Drakeford plans new tax hit on private schools in Wales