Eton College will pass on the full 20 per cent of VAT to parents when it is introduced on school fees from January, it has announced.
The school wrote to parents on Friday morning saying it would absorb the full cost of VAT for this academic year only for those on bursaries. It will take the annual fees from almost £53,000 to more than £63,000.
The government is adding VAT to private school fees from January, which it says will raise £1.6 billion that will pay for improvements to state education, including 6,500 new teachers.
It says schools can choose whether or not to pass on to parents the extra 20 per cent on fees.
Eton criticised the policy on Friday, commenting on it for the first time, and said it would provide financial assistance to those who could no longer afford fees.
In the letter to parents, it said: “While this news was not unexpected, 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 part way through an academic year and at short notice. We recognise the concern that will be felt by many parents following this announcement.”
It said the Treasury had opened a consultation period, ending on September 15, and that final details of the policy were expected to be confirmed in the budget on October 30.
“The provost and fellows have carefully considered the impact of the government’s decision within the context of Eton’s financial position and its role as an educational charity. We have decided to maintain the fees for next year as announced in May. Therefore, from January 2025, we regret that the cost of an Eton education is likely to rise by 20 per cent as a result of the introduction of VAT.
“We will be reviewing the detailed legislation when it is available to determine whether there are any elements of our educational provision which may be VAT exempt or zero rated but at present it appears unlikely that these will be material.”
Parents will know that we have no latitude to reduce VAT itself: 20 per cent will need to be added to whatever fee Eton charges and so the amount due will be governed by the level of that fee. Please be assured that we are continually reviewing our cost base to ensure we keep costs as low as possible, while not compromising the quality of the education we provide.”
The college’s 2022 accounts show it has consolidated reserves of more than £560 million.
However, Waldegrave said that Eton did not currently run an operating surplus, with bursaries funded both from donations and from income from its endowment, which also pays for its partnerships programme, educational research, collections, major capital projects and the upkeep of its historic buildings.
“Therefore, parents only pay for their own son’s education and every Etonian enjoys the wider benefits of a generously endowed institution.” his letter added.
“From January 2025 we will be able to recover VAT on certain costs and services that we purchase. Some of our most significant costs, notably salaries, are not subject to VAT and so recovery will not apply across the board. In addition, the government has announced that independent schools with charitable status will, from April 2025, no longer be eligible to claim 80 per cent business rates relief. This will add over £1.2 million per annum to our current cost base.”