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.

You’re wrong but I’ve lost interest. I’m out 😅

OP this sounds like a case of tough luck.

So (just to be clear, I'm not disagreeing with you) some schools will send the December spring term invoice saying "We know we said in April 2024 that it would be £XYZ for spring term 2025, but it's actually going to be £xyz."?

This and also I doubt they would seek to pursue you for the fees. You haven’t paid yet so leave. See if they do.

Fees are charged on a termly basis.

For us, we got a letter at the end of March explaining what the September fee would be without VAT and how the school would seek to implement a rise over 3 years if labour got in and immediately applied VAT.

We got a second letter after the election but before the announcement saying that the school would hold to the total fee announced for the sept term even if the VAT were immediately applied,

We haven’t yet had a third letter about the amount of fees for Jan 2025 term - but I expect we will get this on 1st sept. From the principles in the prior letters, I could have a stab at working it out but I will just wait. What I expect to happen is that - let’s say the sept term base fee was £5k, the jan term base fee will be £4.5k and the apr term base fee will be £4.6K etc etc.

I doubt you’ll get anywhere if the notice period is written in the contract (alongside I assume the schools ability to increase fees at any point in the school year).

I wonder if you would be better asking for a payment plan instead so it isn’t so painful in one lump sum.

It’s here. RR didn’t say September 2025.

@SheilaFentiman Thanks, your description makes sense - our school hasn't done that though, they sent the normal letter for 2024/25 school fees saying "it'll be £XYZ per term" but I guess they might put a different number on the actual spring term bill when it arrives. How would it work for those who pay the full year in advance though, if the school can change the termly fees ad hoc?

Nope.

Our net fee will be reduced to an extent with 20% VAT applied to that reduced fee as the school has said they’ll absorb some of the increase.

Hmmm… I think that it’s very rare that there would be a mid year fee change, which is why our governors have been communicating well ahead.

Oh well... sadly it looks like my original impression, that schools which already published their 2024/25 fees in advance, will legally have to impose the full 20% VAT.

No they can reduce the net fees before adding VAT. What legal reason would there be that prevents them doing so. Anything can have its price reduced.

Like "Post Christmas sale!"

They can reduce fees but they can't avoid passing on VAT. That's the bit people are getting confused about because Labour said schools can offset VAT when they can't. They can reduce fees to prevent 10% ree rise + 20% VAT (as an example) but the business rate increase will eat into any reductions anyway.

I think we will see schools trying to mitigate rises in the first year but realistically that isn't sustainable long term because fee rises cover staff wages + pensions. So reducing fees = reducing opportunities for staff annual wage increase.
Only parents who pre paid the full year 2024/2025 before 24/07 will avoid any increase to their bills.

For those that are at a school tha have enough money they can reduce its fees without making quite significant cuts. Are you not curious why they were charging more than they needed to before.

Labour said schools can offset VAT when they can't.

A reduction in the base fee is an offset to the VAT increase though. Just as if I fix your shower and install a new toilet, I might reduce my hourly rate to “offset” the cost of parts, or whatever.

Separately, whilst I take your point about business rates, a school previously budgeting £120k including non-reclaimable VAT for building repairs can now claim £20k VAT back, and this kind of claim might help schools push their base fees a little lower than the current level, hence the offset.

It’s a colloquial/“headline” way to describe it, but there are possibilities for some schools.

Errr, not really, no. The school will be making a calculation to minimise loss of existing pupils and empty places if it decides to “absorb” some of the VAT impact in some way. It will probably be time limited as well.

But people seem to think schools can absorb a 20% on vat, an increase in business rates and then any increase in costs like salaries, heating, bank loans.

Realistically this can only be very short term or involve lots of cuts to service long term surely? I think people need to be cautious about schools over promising. Short term buffer maybe. Long term - big cuts on what's on offer or bigger cost.

@Frowningprovidence i think we are in agreement- any “absorbing” will be short term.

I don't see any injustice here- you are contractually obliged to give a term's notice. So do that. Your dc can start state school in January (or in September, but if it seems better to pay for the term and not use it).

Everyone knows that one term payment is likely to be forfeit to the school if circumstances change without much notice - that's why it's there. It insulates the school against just this sort of situation.

Go back to the state school and see if they can hold the place until January. They may well accommodate you. If not, and you want the place, then you are paying what you agreed to pay in exactly this situation.

Most people can understand what VAT offset means. It is the bottom line, the amount payable that people are really interested in and how much increased this is over last year. So the 20% VAT is the percentage applied but the percentage increase to the bottom line can be less due to the school passing on cost savings/efficiency gains.

@Frowningprovidence Schools might decide to reduce bursaries significantly. As businesses and having to collect vat from customers, they might well review discretionary spending. Bursaries now fall into that category. Many bursaries are paid from fee income and interest from investments. Especially at girls’ schools with no long history of women giving to their schools. We paid high fees at our senior school and contributed to bursaries. These contributions might now become voluntary, In my view this should happen because schools need paying parents to stay. Or school closes.

Go back to the state school and see if they can hold the place until January. They may well accommodate you.

But they can't hold it for a whole term, it will be offered to the next person on the list/who applies if currently no list. And even aside from admissions rules, school funding means they need a child on roll for the autumn census, not an empty place. Schools' efforts to get new pupils on roll/hold off removing them around census date makes the football transfer window look like amateur hour.

If no one does want it obviously it will still be there, but that's a huge risk (and child won't get the benefit of starting new school at the start of the year, as well as dragging out the leaving part- a waste of a term). Better to suck up the cost and move now.

They can go through Small Claims court and it will probably cost them less than £300 and get the OP a CCJ

No, as they will now be able to reclaim input VAT on purchases and development which they weren’t previously able to do.