VAT private school requirement to give one terms notice to leave

[KHB]

We have four children who are educated in the private sector. When we did our sums prior to the VAT announcement we could just about cover the fees whilst making many sacrifices to enable us to afford it. We hoped the VAT would be introduced in September 2025, as did the schools we attend, giving us time to work out whether we could afford to continue and give notice to leave if required. Now this has been brought forward to January, the additional cost to us due to VAT is £8850 for this school year alone (spring and summer term 2025). We simply cannot afford this.

Our eldest is due to start senior school in a few weeks time at the start of September (year 9). This school is the most expensive of all the fees we pay. We have made the difficult decision to pull him out and move him to our local state school, who have been incredibly helpful in finding us a place last minute and even allowing us to look around the school during the holidays.

However we are left in the situation where the senior school we are leaving (before we have even started) insist that we pay a full terms fees for pulling our child out without giving the required one-terms notice. My view is that the immediate cost of school fees has increased beyond everyone's expectations, and it would be incredibly detrimental to our son's education and his mental health for him to attend for just one term before being forced to move to a different school. I have written to the bursar to ask him if he would exercise his discretion and consider waiving this requirement. However, I have received little sympathy.

I have heard that some schools are waiving the term's notice requirements to allow parents, like us, to move their children with immediate effect if they can no longer afford to continue paying their school fees. I would be interested to know how other parents have been treated? Does anyone know if there is any scope for legal action to fight the terms and conditions? I would be grateful for any positive contributions. Thank you.

If those assurances were from the school they’ve been rather over-confident. Perhaps they’ll just swallow the cost.

It isn’t at all clear that pre-paying will work.

It's unfortunate for your ds but your choice is either give notice now and send his until Xmas then move him or move him now and have to pay a terms fees in lieu of notice. I'd be thinking about giving notice for your younger DC now so you don't get caught again. They could all go to local schools and you could pay for private tutoring a couple of hours each a week which I found very beneficial for my DC.

How to tell you know nothing about private schools. Yes they will pursue the money because it is part of the contract you sign when your child starts. A legally binding contract.

Yes they are legally obliged to pass on the full 20% because it's the law, whatever Labour may say

We are on a similar income and send DD private for years 7-11. It all depends on the cost of your mortgage + the level of school fees.

Actually she did and then weeks later pulled it forwards.

Have you a source for this? The VAT obviously needs to be paid but schools are not all planning to raise fees by 20% to cover it.

@twistyizzy

The Indie doesn’t see the same event in the same way as that headline:

“We’re not going to have a retrospective tax,” she told the Times CEO Summit. “I don’t think that would be the right thing to do. So these changes would be in our first budget, but they would come in after that, not retrospectively.”

The plans would become law after being passed in Labour’s first finance bill, meaning the earliest they could take effect would be the term starting in January 2025, according to The Times, which reported that experts believe the policy would likely not commence until the start of the new school year in September.

So the Indie’s take on the same event was that “experts believe” sep 2025, not that Reeves said it.

If a school currently charges £10k fees, it HAS to charge £12k (ie £10k plus VAT).

The only way for the school to absorb some of the cost is to charge less than £10k eg if fees are reduced to £9k, the bill with VAT is £10.8k with VAT still at 20%.

It's simply the law. What Labour mean is that schools can re-coup some VAT to knock off the fees but they still have to pass on the full 20% of VAT. What Labour aren't saying is that because they are also changing the business rates on indy schools also then any "slack" created by VAT being reclaimed will be spent on increased business rates. Most indy schools run on tight margins and simply won't be able to absorb much, if any, of the cost. Of course Labour choose to paint this as schools being grabby and greedy when for most schools this simply isn't the case.

No, Reeves said it

@khb to go to your original question I’m sorry but, based on school T’s & c’s that I have read, you are absolutely on the hook to pay this term’s fees if you have only given notice now.

I am a private school parent so you have my utmost sympathy - but with my solicitor’s hat on you are legally obliged to pay. And they will pursue you. You can absolutely try and negotiate (I know people who have been able to have it waived) but it is up to the school and they do not have to. The only line of argument I would try is if they fill your DC’s place from the waiting list so they are not financially disadvantaged and it would therefore be inequitable for them to receive two sets of fees for the one place.

Im glad your eldest has a school place for September - many have been caught out by this and don’t have a place to go to.

Schools are doing this as well of course, and the one I work for is intending to raise fees in the region of 10% I don’t know how the accounting works but the cost to parents is not increasing by 20%.

of course some (many) schools won’t be able to absorb as much/any of the cost.

I think you have to pay the term’s fees. It is a hit, yes, but I’d suck it up and focus on how much money you will be saving on fees in the long term.

This is poor advice

Schools will have lawyers on a retainer and will pursue unpaid fees.

It will have been clear in the T&Cs at sign up what the exit terms are.

A clear term’s notice has been held to be fair in the courts (because so much of school budgeting works in termly chunks)

Yes, it will rankle to pay up. But that is your contractual obligation, and you will still end up saving money in the longer run.

If it’s overly tight for you right now, ask for a payment plan

Assured by who?

The published government guidance says

”School fees paid before 29 July 2024 will follow the VAT treatment in force at the time of the normal tax point for these supplies, where the fee rate for the relevant term has been set and was known at the time of payment”

Can any VAT experts clarify what that means? How far in advance is it deemed that a school can set its termly fees? Normally, increases are once a year, set before Easter (so there’s still time to give notice to quit without paying the fees at the new level). Does this mean that if you bought academic year 24/25 on or before 29/07, you’re OK for this year, but not necessarily after that?

Unless you were there or have heard a recording of the event, you are relying on other people's reports as to exactly what she said. Different sources have reported different things.

"Reeves went on to explain that the measure would from part of Labour’s first budget in the autumn, which would mean the earliest the tax could be implemented would be at the start of the spring term. However, The Times stated that experts have confirmed that it is near certain that the tax will in fact take effect from September next year."

https://independentschoolmanagement.co.uk/news/labour-will-delay-vat-on-school-fees/

I understand that the school can pursue the fees contractually, but I think that if the OP goes to the school and explains the circumstances and that they don’t have the money, the school are unlikely to rush straight to obtaining a CCJ without at least trying to come to some sort of arrangement, especially in the current climate where a lot of parents anticipate that they will be struggling.

I know several parents who have fallen into arrears with their school fees for one reason or another and it’s ordinarily dealt with by the bursar of the school.

If OP can’t appeal to them on the basis of financial difficulties and that the child hasn’t taken up the place, I agree a payment plan would be my next proposal.

The circumstances are that the OP does not want to pay not that she CANT pay.

@twistyizzy yes, I saw that screenshot the first time it was posted. But other sources have interpreted it differently.

I have googled but I need a subscription to read. However, the Google description for the Times article is as follows, which seems more in line with the Indie article.

20 Jun 2024 — Labour will not impose VAT on private school fees before 2025 at the earliest, Rachel Reeves has said, promising that the tax would not be…

https://www.thetimes.com/article/labour-vat-private-school-fees-plans-rachel-reeves-vmc0dhlsm

Do you have the full article from which you are screenshotting ?

Honestly, on the basis that this term's fees do not incur VAT and you haven't given notice, I think you need to suck it up and pay them and just think what you're saving over the subsequent years. Lots of people are in the same boat unfortunately. They will come after you for it I'd say.

@NeverHadHaveHas there is no grounds for the OP claiming they don't have the money/can't afford the fees. The fee they are disputing is the one for September-December which hasn't gone up and is not affected by the VAT introduction. The fee due is the same now as it was when OP accepted the place. OP is definitely able to pay, they just don't want to.

Sorry, but I don't get how that could work.

Schools would have published their 2024-25 fees back in Feb/March/April. When VAT is imposed next year, they'll have to put 20% on top - surely they can't suddenly decide to reduce the fees to make it "less"?

That’s exactly it, reduction of budgets, reduction of bursary’s offered and reclaiming of paid VAT. This isn’t speculation it is literally in the letters the Head is sending to parents. Fees will rise but not by 20% (at least not at first is the subtext that is not being written). I’d post screenshots of the letters if I wasn’t so fond of my job 😂

No, the fees aren't rising by 20% but they will have 20% added on top of fees. They can't NOT do this.
Because VAT doesn't exist now then the invoice for next academic year doesn't have VAT applied yet. That will happen from January onwards. So the invoice at end Dec will be that term's fee + 20% VAT.