Edinburgh’s Merchiston Castle School is one of four leading Scottish private schools that has been told this week that it must improve its community service or risk losing its charitable status.

The Office of the Scottish Charitable Regulator (OSCR) has ruled that the boys’ school, which is located on the outskirts of Edinburgh, is not doing enough to help poorer students. Also under scrutiny is Hutchesons’ Grammar in Glasgow.

The OSCR’s verdict is part of a wider scheme to put more pressure on British private schools to justify their charitable status. New rules state that private schools must make clear their charitable aims, and serve a wider cross-section of society.

The ruling comes despite the fact that Conservative peer Lord Laidlaw gave £1 million to Merchiston Castle in 2007 to create the "Laidlaw Awards", which offer up to 100% discounts for "boys who are talented, but whose circumstances would not allow them to fund the School fees."

These awards are a part of what Merchiston describes as its "commitment to broadening access to the school".

However, current figures suggest that only 16 of the 437 pupils are on these bursaries and only 4 of these have 100% support.

The regulator ruled that this level of support was not enough "to mitigate the exclusory impact of the fees", which currently stand at over £16,000 a year.

The school must now work on its bursary schemes over the next twelve months, or face being stripped of its all-important charitable status.

Charitable status gives UK Charities a number of tax exemptions and reliefs on income, gains and profits. Charities do not have to pay business rates or VAT and this saves Scotland’s 50 charitable private schools an estimated £4.5 million each year.

It is predicted that the loss of that charitable status could result in fee rises of up to 8%.

Merchiston Castle says that it is disappointed by the results of the OSCR review but has vowed to work hard on addressing its criticisms immediately.