PRIVATE schools would retain some of their tax breaks under a Labour government as the party U-turned on its pledge to strip them of charitable status.
Labour have said they no longer need to end the charitable status of private schools to achieve their policy of charging 20% VAT on fees and ending business rates relief in England, as first revealed by the i newspaper.
This means that being able to claim gift aid on donations and not paying tax on annual profits – which must be reinvested in education – will still be among the tax breaks that charitable status confers.
A Labour spokesman said: “Our policy remains. We will remove the unfair tax breaks that private schools benefit from, to fund desperately needed teachers and mental health counselling in every secondary school.
“This doesn’t require removing charitable status, however driving high and rising standards for every child against the backdrop of a broken economy requires political choices.
“Labour isn’t afraid to make them.”
The latest move contradicts comments made in 2021 by Rachel Reeves (below) who said at the time: “Here’s the truth. Private schools are not charities. And so we will end that exemption and put that money straight into our state schools.
“That is what a Labour government will do.”
However, the chief executive of the Independent Schools Council Julie Robinson remained critical of the move.
They said: “If Labour takes away the tax relief associated with charitable status for independent schools, the policy would create a two-tier system within the charity sector, setting a worrying precedent that any charity seen as not reflecting the political ideology of the day could be subject to additional taxes.
“We would love to work with Labour to build more effective ways to achieve our shared goal of improving education for all young people.”
Labour’s policy costings only ever took into account charging VAT on schools fees and ending the business rates exemption, rather than other tax breaks.
However, shadow education secretary Bridget Phillipson had previously spoken of “scrapping charitable tax status for private schools to fund the most ambitious state school improvement plan in a generation”.
The Tories have accused Labour of having U-turned.
Chief Secretary to the Treasury John Glen said: “Labour has been forced to U-turn on one of their major policies – this time admitting that their schools tax hike just doesn’t work.
“Keir Starmer is clearly only interested in short-term policies designed to grab headlines, without any regard for the consequences – and inevitably has flip-flopped on them.”
