VAT on School Fees: FAQs

It is stated Labour party policy if they become a majority Government in the upcoming General Election that they will introduce a VAT charge of 20% on to all Independent School fees. For clarity, despite some of the language currently being used both by politicians and the media, this is a tax on the consumer rather than the organisation. Therefore if implemented it will need to be applied in full to all School fees. Any mitigation measures enacted by Schools will seek to relieve the overall burden but cannot reduce or eliminate the VAT charged  to parents.

In addition, it has been proposed by the Labour Party that business rates reliefs enjoyed by Independent Schools which are charities will also be removed. This will add a direct new cost burden to Independent Schools. This change has already been imposed from 2021 on Independent Schools in Scotland under the devolved Scottish Assembly.

The Labour Party have announced that these measures in England will generate over £1.6 billion in additional funds to be invested into the state education sector. Those numbers are disputed by sector representative organisations such as the ‘Independent Schools Council'

The General Election may take place in May; will most probably take place in the Autumn; and must take place before the end of January 2025.

The Labour Party has publicly stated that these taxation measures will be enacted swiftly and as an immediate priority, should they form the next Government.

On this basis, it is anticipated that any changes would most likely be introduced for September 2025, although it is possible that they could be imposed partway through the academic year 2024-2025.

Because these timing factors are entirely at the discretion of a future Labour Government, and they have not provided any additional clarity on the timescale of implementation beyond stating that it will be swiftly enacted, we are focused on ensuring that we have robust planning in place for both the anticipated timeframe and the potential for ‘earlier than expected’ implementation.

One factor that is little mentioned in the media is that should VAT be applied to School fees, then Independent Schools will also be able to claim VAT back which is incurred on their own spending. 

Based on our historic spending levels, the net impact of the VAT policy for us has been calculated as approximately 16% rather than 20% overall.

Whilst the financial implications are nonetheless significant, our Schools have a robust financial track record and solid financial position. As a result, we have the financial resilience to absorb some of the immediate impact of the imposition of VAT on our parents.

Our planning has been based on sharing the increased burden between both the Schools and our parents but doing so over a period of time. We therefore do not intend immediately to pass on to parents the full financial impact.  Instead, we are looking to use the financial resources of the Schools to help parents to manage the imposition of VAT over several years through graduated annual fee increases. This will minimise the short term impact of the imposition of 20% VAT on fee levels, allowing parents to plan with confidence their child’s education at KES and Stroud.

We believe that our Schools will be able permanently to absorb a portion of the overall impact of the imposition of VAT, although some of the increased cost will inevitably be passed on to parents.

We will also need to plan for normal inflationary pressures, and our mitigation strategy has therefore incorporated sensible forecasts for the impact of this.

It is critical that we continue not only to deliver an exceptional educational experience for our pupils, but also continue to invest in our Schools. Our planning is designed to allow all such investment to be preserved, whilst diligently focusing on continually ensuring that parents’ money is spent wisely, and always with careful consideration for the needs of our pupils.

The mechanism for achieving a ‘phased and partial’ introduction of VAT on School fees will be through reducing pre-VAT fee levels so that the total fee increase is not as burdensome for our parents. Please note that VAT itself must be applied at 20% to our bills when this policy is introduced and will appear as a separate line within billing documents at that time.

However, we must state for clarity that whilst our planning for this approach is well-advanced and has been subjected to rigorous scrutiny and approval from our Governing Board, nevertheless the School may need to react to future circumstances, and our planning may change if so.

As part of our planning, we are actively considering building a new strategy to increase non-fee income for our Schools, using our wonderful assets at the main KES site, Stroud, Wellington and Lovaton to generate additional income during fallow times. These monies will be used to reinvest in your child’s education, and to counter-balance the costs of these new policies.

Equally, we will continue to seek out and implement sensible and measured cost-savings, where these do not impact upon the quality of our educational offer. This has always been the case, as we believe that we have an ongoing duty to use your fee income wisely at all times. This does not mean that we will decrease our investment in the opportunities or educational priorities we hold dear as a School, but rather that we will, as ever, continue to evolve our provision to match the needs and aspirations of your children and to reflect our deeply held ethos and values as the leading co-educational day school in our region.

Our Schools have always been at the forefront of educational excellence in Hampshire, providing our pupils with an outstanding academic experience, whilst also offering unmatched co-curricular opportunities and pastoral care. We are truly proud of what our pupils achieve and what our School enables. This is what we do… and have done for nearly 500 years - and we will not change this approach under any circumstances!

We believe that we have also shown ourselves in recent times to be resilient, creative and flexible in how we manage our Schools. We were proud with how we navigated COVID, and especially proud of the numerous plaudits we were offered at that time by our parent and pupil community. We hope that our response to the pandemic proves our ability to progress and improve our provision even when facing challenges. In the coming years we will similarly continue to innovate; to build and to improve the wonderful experience for every child who attends Stroud or King Edward’s.

We have always sought to ensure that our parents are well informed about their child’s School. We use the weekly Bulletin to let parents know about our provision and opportunities, and this will continue to provide a means for timely communications. In addition, we have set up this page on our website, where parents can see the Schools’ responses to ‘frequently asked questions’ about the impact of proposed Labour Party policies. Finally, we will write directly to our parents and prospective parents whenever external circumstances change, and at key points in the implementation of our mitigation strategy. By these means, we intend to keep our whole community well informed not only about the challenges being faced, but our responses.

If parents feel strongly about the imposition of VAT upon your fees, then we would welcome your support in voicing your concerns to those in positions of influence who are supporting these measures. At the bottom of this webpage we have provided a link to a national campaign set up by parents from across the country who share concerns at this policy. 

We believe that we have an absolute duty of care both to our current and prospective pupils and parents. We want you to be able to commit to Stroud and KES confident in the knowledge that you will continue to be able to afford our School fees over the longer term. We  believe that the lifelong benefits of a Stroud and KES education are huge, and we want you to remain with us until your child leaves at the end of Sixth Form, having experienced the full range of experiences offered by our Schools. Therefore, we want to ensure that the impact of the imposition of VAT on your School fees is managed carefully, so that you can continue to enjoy these benefits and opportunities. All of our planning is designed to achieve this end whilst still allowing us to invest in your child’s education as you would hope and expect.