VAT on fees - will your school help current families who are struggling?

[rosegoldtoner]

I know there has been much discussion on here about this, and I really don't wish to ignite a debate about private versus state and if this policy is right or wrong...but I'm curious as to how your schools are intending to support parents who might be unable to cope with the increase on fees?

My DC's school hasn't yet been clear how large a percentage they will add to fees. It is one of the most expensive day schools in London with an extremely strong charitable ethos which is great. There are a number of pupils on full bursaries - the school's policy has always been that they offer 'life changing' bursaries - offering them to pupils that wouldn't otherwise have a chance to attend the school, rather than supporting families in other ways such as through academic scholarships or smaller sibling discounts, for example.

The school are aware that a lot of families are already pushed to the absolute limit - there was a huge parental backlash a few years ago based on the ever increasing fees, and the school have acknowledged in the face of VAT that many parents are extremely worried and might be left unable to continue to send their children to the school.

HOWEVER, the school seems to be continuing on with their existing bursary policy for new pupils coming into the school - whilst at the same time being unclear as to how they will support existing families who are going to struggle. This seems particularly upsetting when many families have been attending the school for many many years (there's a junior school as well) who might have to pull out their kids at crucial exam stages.

Seems to be the very opposite of 'charity begins at home'? What are other schools doing?

In response to some comments, even with the greatest of foresight and planning, so many children will now be faced with being uprooted, separated from their friends and experiencing huge change from all they have known - many of them with extra needs, like my DS, who will struggle immensely.

Again, I can only second this. We have a disabled person in the family and the new school is very far so our family will be torn between education and care duties. It's hugely disruptive.

Well yes, if you want to be in deep shit with the taxman you could do that. I wouldn't recommend it.

It's perfectly legal Expenses and benefits: school fees for an employee's child: Overview - GOV.UK (www.gov.uk)

I don’t think any parent will complain if some private schools actually choose to lower the base fees for terms 2 &3 due to the recent VAT announcement. I am assuming they can just do that - it is only increases that they would need to communicate in advance.
And nobody knows how long it will take them to reclaim the VAT rebates on capital projects and some might try and allocate those to families who can’t afford base fee plus VAT.
Finally, there is also the business rates issue yet to be clarified and how that will work given Nuffield Health won at court and does not have to pay business rates, because it is a charity.

For example, many lowered base fees by 10-15per cent during Covid so there is recent precedent for that aspect.

@Digimoor - yes I said the same on another thread. Ultimately people coming to London for big jobs will only relocate with a school fees package and eventually, locals will demand the same.
I do also think we will see a new type of private selective lean run school spring up with no charitable status and there will be a boom in that area. It’s what a lot of parents want and the state has failed to deliver en masse. Probably with lots of private equity in it and large successful international education groups jumping in. Private schools not cost cutting need to be aware of that kind of potential competition too.

The disruption is all utterly pointless as well because the education market will adjust ultimately and the taxman won’t gain from this. Just a generation of educated anti Labour voters due to a vindictive and pointless policy. But that is populism for you. It’s a mini Brexit all over again.

OP but one thing this VAT has created is a new form of parent activism that private schools have to now contend with and I think it might be a good thing. I am
assuming you are in such a group for your school and I wonder whether there might be communication across different schools in the future, between parents.

@MumChp - not quite sure why you need to be so snitty. No-one has suggested that private school parents are on the breadline - in an earlier post I've acknowledged that if you are sending your child, or children, to a private school, you are most likely wealthy.

But the bottom line is that for most families, there is, to quote another poster, no magic money tree - and there comes a point when families simply can't afford it any more. I am curious as to how other schools might be helping parents in that position.

There are year groups with no space in my borough. I know DC who have left private and still don't know where they are going in September. I don't know why posters keep insisting that kids will "just" have to go to state school. It's really not that simple!

I need to find an extra £800 a month for my two DC in a London day school. Lucky for you if that's small change, but it's a considerable amount of money for us.

@Araminta1003 - there is definitely more of parental activism now. It started during the pandemic and has continued.... There seemed to be an expectation from the school that all parents were super-wealthy (possibly because the school's senior management are all extremely well paid themselves).

But do you think the education market will eventually adjust? If you are looking at fees of, day, 50k a year in a few year's time, how many will realistically pay for that - particularly if the academic standards are going down due to a less brainy cohort?

I already know a lot of families who might have easily chosen private schools a few years ago are now going for the grammars. It's absolutely what I would do if my kids were primary aged.

@Readyforseptember - exactly.

I don't have children in private education and am a state secondary teacher. Finding this thread really interesting and lots of thoughtful posts (have read a few that gave quickly become a bun fight).

I agree that school should prioritise existing students whether in a bursary or not and not be offering support for new students. I feel this is a bit of a sticking plaster way of saying they are helping less well-off children anyway, by having a few super bright exceptional children, when eg broader support at a local state school might help a wider cohort.

@edwinbear - yup, and are you able to manage this? Most families can't just magically up their income to that extent - it's really way beyond tightening the belt a bit...

@Bobbybobbins - thank you, I'm really pleased you think that - have also seen many posts become bun fights and wanted to avoid that! It just occurred to me that our school have been far from transparent as to how they will support existing families, and wondered if other schools have plans in place...

I also know the sixth form at the (state) school where I teach has received some late applications for y12 as well as some parents trying to move for y13. Unfortunately we don't accept y13 joiners @Postapocalypticcowgirl not accepting Y13 joiners will need to change though, surely? If Y13 parents can't afford the VAT and remove their DC/their DC are removed for not paying fees, the council has no choice but to find them a place somewhere, these kids will be eligible under FAP after 4 weeks won't they and schools will be forced to take them?

@rosegoldtoner in answer to your question, we've prepaid some fees. DS goes into Y11 in September and DD Y8. As we paid before 29th July, certainly this academic year (24/25) we won't have to pay the VAT (as the exact cost of fees was known and invoiced). DS will move to state for 6th form, as others have said there are some great sixth forms in London and he's predicted excellent GCSE's so hopefully it should work out OK.

Schools are unable to say what the additional fees are because as yet (I work in school finance) we don't know what the policy is regarding the VAT addition.

The headline is that providing the service of education will attract VAT at 20% - but a school bill is made up of education and other components, for example catering and boarding, currently these are VAT exempt if provided in the course of education, no one knows if this will change or not.

If certain elements of the bill remain VAT free, then the overarching percentage increase to the total fee will be less than 20%.

Once the full details re known school bursars can look at weather, but gentle manipulation (ie slight reduction in education, slight increase in VAT free services) that the overall effect can be minimised.

My guess, and others I have spoken too in the sector is that the devil will be in the detail, and HMRC will have thought of most workarounds and plugged them!

The schools could reduce their fees and therefore reduce the VAT payable, but cannot reduce the VAT itself.

As an amusing aside, I was talking to the SBM of our local Pupil Referral Unit, which is funded by the LA on a per pupil fee basis, built by the LA in the 60's but a charitable trust registered as an independent school - from jan, they will have to charge VAT to the LA, which raised a wry smile😬

Another point to remember is many private schools, like mine, are not VAT registered, we have just registered in readiness - this has an effect of course the other way, that we can now claim VAT back on our purchases, hitherto never done - so although we have to add one end, like other VAT registered businesses we can claim the other end too, which will be a significant saving.

I've had written confirmation that DS' scholarship will be continued for his remaining two years. So, yes.

@edwinbear - yours might have a different policy on fees in advance, but parents at my dcs school have been told that won’t work. Parents have always had to ‘make up’ fee increases later even if they have been paid in advance, so presumably this will apply to vat owed on a similar basis?

My understanding is the fees in advance will only work if there is a paid, specified invoice - ie the school has invoiced a final invoice for a service to be provided at a specific date, ie: £7,000 for education provided in the Autumn term of academic year 2026/27.

This approach is problematic, as the school has issued a final advanced invoice, and cannot request more if fees go up. The parents are locked in to the school and if the school goes under, potentially loose the lot.

@rosegoldtoner that's true where fees haven't already been set in advance, so academic year 25/26 when the annual rise isn't yet known. However our fees for 24/25 (so from this September) had been set, invoiced and we've fully paid the full academic year for both DC, before 29th July, so no VAT applicable this academic year.

That is correct, you have paid a final, specified invoice for the service to be provided, so VAT won't apply in your model.

@Education79 will be far more knowledgeable than me however, I honestly think the entire thing is a complete mess, and I do feel for the school bursars and SLT who are no doubt working ridiculous hours over the summer to try and come up with some semblance of a plan. Our school haven't said a word to us yet, but I'm quite sure they will, when they have an idea of what they're going to do!

so if you couldn't afford the fees any longer when VAT is added - or even if you could but your child's best mate couldn't - would you rather you/they leave the school at a key stage and entirely new kids join the school on bursaries?

well technically yes, because I assume bursaries are for disadvantaged children not those who are high earners but can’t stretch that far.