Some private schools declared that they would absorb portions of the cost of removing tax exemption.
Eton College has notified parents via a letter that it will increase fees by 20% in response to the government’s removal of the VAT exemption on private schools. The annual fees of £52,749 will be raised to about £63,000.
The school stated in a letter to parents that “The provost and fellows regret that the government has chosen to tax education in this way.
“Furthermore, we are disappointed that the introduction of VAT will take place partway through an academic year and at short notice. We recognise the concern that will be felt by many parents following this announcement.”
In January, the government will begin scrapping the VAT exemptions and business rates reliefs for private schools to fund 6,500 new teachers in state schools.
Private schools do not have to charge a 20% VAT on their fees because of the current tax exemption for the supply of education.
Parents of the largest private girls’ school trust should also expect a 12% increase from the new academic year due to the government’s VAT plans.
The Girls’ Day School Trust (GDST), representing 23 private educational institutions in England, including Shrewsbury High School, Blackheath High School, and Wimbledon High School, also announced that it will be the remaining 8%.
A 12% raise from the current average national annual fees of £18,064 will amount to £20,232. This week, the GDST stated in a letter to parents, “Since the government’s announcement at the end of July, we have worked at pace to deliver on our commitment to reduce appreciably the overall financial impact of these tax changes on your fees.
“Following a detailed review of our costs and approval from trustees, we are now in a position to confirm that fees, inclusive of VAT, will rise by 12% from January 2025.
“We have managed to mitigate the full financial impact of 20% VAT and the removal of business rates relief by using the opportunities that our size and scale provide and by passing on any benefit we may receive should we be able to reclaim VAT on other aspects of our running costs.
“The largest proportion of our outgoings is investment in our staff, which we will not compromise on in our delivery of the academic, co-curricular and pastoral excellence you expect from our schools. We appreciate the financial pressures that will be felt by many of our families.”
A spokesperson for the government stated that, “We want to ensure all children have the best chance in life to succeed. Ending tax breaks on private schools will help to raise the revenue needed to fund our education priorities for next year, such as recruiting 6,500 new teachers.
“It is for individual schools to consider how they manage this cost based on individual circumstances, including steps to minimise fee increases.”
