VAT on Private School Fees

I’m sure you’ve seen the recent proposals by the Labour Party that if (or is it when?) they are asked to form the next government they will aim to remove various tax exemptions from private schools.

The most relevant one to consider here is their plan to levy VAT on private school fees. They’ve said the revenue raised would then be used to increase state school spending and would be targeted at pupils from disadvantaged backgrounds (yeah, right!)

We have to remember that it’s the Labour Party who, in the 1970s, tried to wipe grammar schools off the face of the English educational map and it was only because of the belligerent actions by some local councils and a few individual schools that we still have the remaining grammar schools open today.

So it’s fair to say Labour’s long-term plan is to implement a “We know what’s best for your children, not you.” approach, and given the chance they’d close every grammar school and independent school tomorrow.

That closure would, however, be a knee-jerk reaction, since they don’t have enough fit-for-purpose state schools for the pupils they’re trying to provide for currently and we’ve only to consider the ongoing RAAC fiasco to realise that the shortfall in usable, safe school buildings is not going to be resolved anytime soon.

What will happen if or when VAT is levied?

There will undoubtedly be various legal challenges but let’s assume for the sake of argument that they do pass this law. What happens next?

Initial research by the independent schools’ organisations and the Institute for Fiscal Studies suggests a net increase in fees of around fifteen per cent (because schools will be able to claim back VAT on their expenditure).

But for many families, either already in the private school system, or hoping to send their children to one in the next few years, those increased fees might force them to reconsider their plans.

Here are just a few of the options they might have to consider:

• A few might have the funds to cover those increases without raising an eyebrow.
• Others might have to make cutbacks in a few places, but they’ll still be able to send their children to their #1 school of choice
• For some families, it’ll mean their child will need to achieve a scholarship place or be awarded a bursary.
• Some with younger siblings might have to “split” their education, with the younger ones going state whilst keeping the older child in a private school.
• Some might have to move to be in the catchment area of a now-preferred grammar school
• Some may have to take the uncomfortable step of removing their children from a private school and seeking out a place in a local state school instead (after giving a terms’ notice do to so).
• And other parents aiming for entry in the next few years will have to consider very carefully whether they can afford those increased fees until they take their A-levels.

Reductions in gifts and endowments to independent schools

Every year independent schools receive gifts and endowments, often from the families of ex-pupils. Schools often use these to provide bursary payments to reduce the fees for the parents of students who might otherwise be unable to afford full school fees.

But other members of those families might start to make a call on those funds before they can be gifted or endowed (eg grandchildren or the like) which could impact further on the financial position of those schools.

“But we’re aiming for a grammar school. Surely we’re ok, aren’t we?”

Many parents not considering independent schools might have ignored these articles, thinking ‘That won’t affect us.” but I suggest that’s incorrect; this issue will affect you.

ALL grammar schools have many times more children trying for a year seven place than they have spaces available and this has led to an ever-increasing target score (or ‘pass mark’) being required to secure a place there.

What do think will happen to your child’s chances of getting in if more independent school parents, now unable to pay those increased fees, make securing a place for their child in a grammar school their #1 objective?

Rather like “the domino effect”, capable children unable to secure a seat at a private school will place knock-on pressure on other children when those September grammar school tests come around.

It’s going to mean your child will have to achieve a higher score than would otherwise have been expected.

“We’re safe. Our local comprehensive has a good reputation”

We’re the first to acknowledge some non-selective schools achieve very good results for their students, but those schools come and go. Their results are shaped by their non-selective yearly intake.

Furthermore, when looking back over GCSE and A-level results we’ll find it’s invariably the comprehensives that are in the better or more affluent areas that are usually at the top of the tables.

This means if you live in the ‘right’ location you might come out of this situation unscathed, but what if some of the families in your area that would have previously wanted to send their children to an independent school fix their gaze on “your” comprehensive?

Limited spaces mean if their child gets in, yours might not.

So what can you do?

Simply put: make plans, and make more than one of them.

Also, make sure you start your preparations early.

The head-in-the-sand, “We’ll be ok” approach never works whenever the government and education are concerned and delaying taking action invariably means you’ll be left with limited options at that critical time.

Let’s Arrange an Assessment Call

We’ll often appear on the radar of parents who, with a child in years 1 or 2 are already thinking ahead, beginning to give shape to a plan that will see them ready to sit their entrance tests a few years later.

Whilst it used to be “okay” to defer starting your child’s test preparation until the beginning of year 5, that approach no longer works.

With the ever-increasing levels of competition for places at schools, we’re finding children, when aiming for top grammar or independent schools, do better with a more steady start, either from around the end of year 3 or by early in year 4.

If you’ve got any questions about the eleven plus that you want to be answered you can book a call with me using my ​Calendly link​, or you can send me a more detailed enquiry via my ​contact form​ if you prefer.