Have your school shared VAT update?

[nearlylovemyusername]

Just heard from ours, total increase will be 15%. This is on the top of annual increase of 4%.
Significant number of kids moving to grammar

Neither of ours have communicated how much VAT they will pass on so I'm expecting it to be the full 20% - this after 6% annual increase for the coming academic year. Older DC has been on the waiting list for a Grammar school place for some months but haven't heard anything, so it might be we have to wait and try for 6th form, younger DC will be sitting the 11+ in a years time.

Ours has said they will to offset 4% but may have to pass on full 20%, on top of 4.4% fee increase

Not heard anything from ours (a selective London day school) but I am expecting the full whack as it’s not a school with significant endowments that they could use to offset the VAT (which is what I understand Eton and some others are doing).

I expect they will honour any already offered scholarships and bursaries. Slightly off topic but when covid caused some parents to lose their businesses, I understand that the school granted full bursaries to all the children affected so their education and lives were not unduly affected. (Which is one of the reasons I love the school and will do what I can to keep my DD there, because they really do put the children’s welfare first, unlike some private schools.) However I cannot imagine they will have enough money to do that for everyone who can no longer afford the fees with the VAT increase, and I do wish they would hurry up and tell us what we are all facing…

We’ve been told full 20%, but I think/hope this will be reduced in line with competition. Everyone’s waiting for someone else to go first. Lots of groups have been more forthcoming than small indies.

We’ve been told that the school awaits further finer detail on how VAT legislation will be changed, and what the school will be required to levy VAT on, as well as what VAT the school is able to reclaim. They say that until they have this information, they are unable to make firm plans in relation to fees.

I have also looked online at company accounts. I wonder about the solvency of the small independent school which my son attends and worry in case it experiences financial problems in his GCSE year. What would people say is an indication of a healthy incomings/outgoings chart? Most recently there was only a £100,000 difference between the two for them and this doesn't seem like much of a cushion.

Not yet, note that VAT percentage is a relative term. The higher the baseline, the greater the absolute difference will be for the same percentage, and the compound effect could be phenomenal.

I'm based in (North/Northwest) London, some kids from eligible postcodes apply for grammars like Latymer, Queen Elizabeth and Henrietta Barnett, some would pass but give up their grammar places and opt for super selective indie instead. So, they keep their places as a backup in case they dont get into their desired indie. VAT will have an impact on this and this year for example the waiting list for Harnietta Barentt moved very slowly.

A lot of posters keep posting stuff that basically has a message of “All these kids who would have gone to private schools are going to go to grammar schools instead!!”

I have the feeling that they are emphasizing this point as a way of saying “See? VAT on private schools is a bad thing, because it’ll reduce the number of grammar school places going to poor kids.”

Whereas in reality, I think most of us are looking at these posts and thinking “Wow, if that is the case, then the 11 plus system really is shit and not fit for purpose. Sounds like it’s time to start either moving away from grammar schools or weighting the grammar school entrance criteria heavily in the direction of favoring kids from poor families.”

With any luck, maybe some changes to the grammar school system will be next. :)

we continue sharing updates we have about VAT related fees increases

All through school in the southwest. School will pass on 5% of VAT from Jan, on top of the 6%annual increase already baked in. Next year will pass on a further 5% + standard annual increase. Eventually we will be paying the full 20%, but school are trying to lessen the initial impact.

@NorSom this seems to be the best so far

Made me thinking if other schools will phase full increase in as well given that now they are still able to offset historical capital projects

This does not make sense, the HBS WL as of mid July is 31 vs 35 same time in 2023 and the QE boys WL definitely move further compared to last year. I don't see such impact effect as you claim.

DH works in a school that is passing on the full 20% VAT. They can't afford not to as they have minimum input vat to recover against it.

@jennylamb1 a good way to look at the accounts is to see how many pupils they need to lose for a profit to turn into a loss. Then look at the reserves - how many pupils can they lose before the reserves are wiped out?

DH school had £1.5m in reserves 5 years ago and now they have under £500k. They made a loss last year and forecast another loss this year based on current numbers. If they lose 10 more pupils they will close next summer. They are considering closing anyway.

No official announcement but I had had the fee schedule for whole of next year and its a 10% increase. As the school usually does 5% tops I am going to assume that it has been done like this to level the whole year rather than from January when VAT comes in.

Hi Lychee, very useful advice! Not sure how I can find out what reserves the school has, but at £15k a year fees and with a present £100k difference between incoming and outgoings, only 6 pupils leaving would put them into a deficit?

Yes. They announced before election that no VAT would be charged in 24/25 school year. I guess they (wrongly) banked on Labour not introducing the change mid-financial year and were keen to give parents some certainty. Suffolk, non-selective boarding and day, centuries old, charitable school with lots on assisted places - CEA, bursaries and scholarships. What will happen from next September is still unknown.

@jennylamb1 if you looked at the online accounts it will show you the reserves, it's at the bottom of the Balance Sheet.

£100k profit looks good at face value doesn't it, then you think that's only 6 pupils and it seems rather precarious.

Our school lost 50 pupils over the last 3 years and the VAT introduction is bound to see a few more departures. It's on a knife edge.

Our local private schools are sitting on around £15m in unrestricted assets, and their income exceeded their expenditure last year by well over £1m. I reckon they could comfortably afford to cushion the blow a bit for parents if they chose to do so.

Nothing as yet. I've made enquiries and been told we'll get it before term starts so we have the opportunity to give a terms notice but I'm not holding my breath for a lot of time to consider it. DC1 requires educational support but DC2 does not. It's been really difficult to keep them both there and now feels very unfair that we will in all likelihood have to prefer one over the other.

We will all still eat and I recognise this is a first world problem. I'm really illogically resentful even though I voted for Labour knowing this was a likely outcome. And voted for Corbyn too, couldn't bring myself to vote for bloody Boris.

Just thought I'd have a bit longer to figure out whether it was my kidney or DH's that would have to go....

The cap on Uni fees will be next

Not seen an email over rises yet. DC is applying for state school for the year after, as this year is a cut off year, so a good time to move. I’m on a WhatsApp of 10 of my DC’s friend’s parents and every one of us is applying to state next year.

It’s just not worth the money, aggro and vitriol anymore, it’s really not. We went to the open day, and done our research and state and tutor is the way to go. We are very comfortable with our decision and look forward to the extra £1.5K a month we will be saving.

Indeed the school will be struggle to give any sensbile update before September to honour the one term notice, as the next government budget on VAT details willl only be announced in Autumn. I believe some bigger schools will try to keep the same fees throughout this year and leave the increase to September 2025.

It's called unintended (or possibly intended) consequences. What did people think was going to happen?

Deal with the inequalities in the state system first (by funding it from general taxation) and the allure of private schools falls away. This is a ridiculous policy based on ideology not reality.

It's surprising how many familoes with children in private schools seem to live in areas which also have grammar schools given that the majority of England and Wales does not have a selective education system.

We are in the process of buying a second home that will become our primary residence smack bang in the middle of the secondary catchment we want.