Removal of relief for private schools in England Section 5: Removal of relief
Section 5 of the Act amends Part 3 of the 1988 Act to remove certain private schools from any entitlement to charitable rate relief. Subsection 5(2) removes the relief for occupied private schools and subsection 5(3) removes the relief for unoccupied private schools.
	The rules for charitable rate relief for occupied hereditaments are found in paragraph 2 of Schedule 4ZA to the 1988 Act. These provide that hereditaments occupied by a charity and wholly or mainly used for charitable purposes are entitled to 80% rate relief. Subsection 5(2) of the Act amends paragraph 2 of Schedule 4ZA to insert new sub-paragraphs (3) to (7).
	The new sub-paragraph 2(3) of Schedule 4ZA excludes from charitable rate relief a hereditament wholly or mainly used for the purposes of carrying on a private school. This includes hereditaments which are themselves being directly used for education at a private school (such as classrooms, halls and sports facilities) but also hereditaments used for administrative and ancillary uses (such as offices or storage) provided they are also used for the purpose of carrying on a private school.
	The meaning of private school is defined in the new sub-paragraph 2(4) of Schedule 4ZA and comprises two parts covering schools for pupils of compulsory school age (sub-paragraph 2(4)(a)) and institutions for pupils over compulsory school age and under 19 (sub-paragraph 2(4)(b)).
	For compulsory school age provision, the sub-paragraph 2(4)(a) of Schedule 4ZA defines a private school as a school where full-time education is provided for pupils of compulsory school age, fees or other consideration are payable for that education and it is not a nursery school. This test of fees or other consideration being payable for that education follows the test adopted in the Finance Act 2025 in respect of removing the Value Added Tax exemption that private schools benefitted from in respect of education, vocational training and boarding services. 4 This includes consideration for education such as gifts, bequests and other referrals of value. The fees or other consideration may be payable by private individuals or bodies or the state but does not include block grant (such as are paid by the Department for Education to fund Academies).
	The definition of private school excludes nursery schools which are defined in the Education Act 1996 as a school wholly or mainly for the purpose of providing education for children who have attained the age of two but are under compulsory school age. 5 This exclusion ensures that standalone private nurseries are not be affected by the Act even if they have a few pupils of compulsory school age. However, private schools providing education to pupils of compulsory school age which also incorporate some nursery classes will lose their entitlement to charitable rate relief entirely.
	For education provision for persons over compulsory school age but under 19, the new sub-paragraph 2(4)(b) of Schedule 4ZA defines a private school as an institution providing education for such persons provided that the institution:
is wholly or mainly concerned with education suitable to the requirements of such persons. Typically, this will be A levels, BTEC Level 3, T levels or equivalent courses of the type provided at, for example, a sixth form college,
is providing full-time education to persons over compulsory school age but under 19,
provides education to the persons in (b) which is wholly or mainly funded by fees or other consideration. As discussed above, institutions where the persons referred to in (b) above are wholly or mainly funded by block grants from the state, such as state funded Colleges of Further Education, are therefore outside of scope and will retain any charitable rate relief, and
is not an independent training or learning provider.
	The new sub-paragraph 2(5) of Schedule 4ZA excludes from the definition of private school, an institution which is wholly or mainly concerned with providing full-time education to pupils with an Education, Health and Care Plan ("EHC Plan").
	The new sub-paragraph 2(6) of Schedule 4ZA defines independent training or learning provider for the purposes of its exclusion, in the new sub-paragraph 2(4)(b)(iv), from the meaning of a private school. Independent training or learning providers supply state funded training and education to those above compulsory school age and are, therefore, akin to state funded colleges of further education. They are therefore defined in sub-paragraph 2(6) as an institution providing such education or training under contract with the Secretary of State where the Secretary of State pays the fees.
	The new sub-paragraph 2(7) of Schedule 4ZA defines for the purposes of sub-paragraph 2(4) and (5) "compulsory school age", "EHC Plan", "nursery school", "pupil" and "school" by reference to their meaning in the Education Act 1996.
	The rules for charitable rate relief for unoccupied hereditaments are found in paragraph 2 of Schedule 4ZB to the 1988 Act. These provide that a hereditament owned by a charity which it appears that when next in use will be wholly or mainly used for charitable purposes is entitled to 100% rate relief. Section 5(3) of the Act amends paragraph 2 of Schedule 4ZB to insert new sub-paragraphs 2A and 2B. Sub-paragraph 2A provides that charitable rate relief does not apply to an unoccupied hereditament if it appears that when next in use the hereditament will be wholly or mainly used for the purposes of carrying on a private school. Sub-paragraph 2B provides that the meaning of "private school" has the same meaning as in paragraph 2 of Schedule 4ZA – i.e. the same meaning as applicable for occupied hereditaments.