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27
Oct
Are Harrogate district private schools hiking fees to cope with VAT?
Parents of private school pupils in the Harrogate district could be hit with an increased bill in just a few months’ time.
The legislation has not been officially approved, but HMRC said earlier this month from October 30, school and boarding fees for terms starting on or after January 1, 2025, will be taxable at the standard rate of VAT of 20%.
"VAT will be due on the total of everything that is received in return for providing education to the student", it adds.
The Harrogate area is a hotspot for independent schools, so this would have a huge impact on a lot of people.
With just days to go until Chancellor Rachel Reeves gives her first Budget, schools and parents are nervously waiting to see if their pockets will be stretched even further.
We caught up with some of the independent schools in the district to find out their plans for the proposed policy.
Harrogate Ladies’ College and Highfield School
Harrogate Ladies’ College is an independent all-girls’ school. Highfield is the co-educational junior school.
Parents of day pupils are currently set back £6,800 per term, while boarding fees range from £12,070 to £14,410 per term.
Principal Sylvia Brett told the Stray Ferret school fees will remain fixed for the remaining academic year, even if the VAT legislation comes into play.
She said:
Following the consultation that closed in September, we are now awaiting final details of the policy to be announced in the budget at the end of this month.
In the meantime, we are undertaking a revision of our financial modelling based on the information currently available. We have also confirmed our commitment to parents that fees for the current academic year will remain fixed for current pupils and we will continue to do everything we can to mitigate the impact of this policy on parents and the school.
Belmont Grosvenor School
Belmont Grosvenor School, in Birstwith, is a private primary school.
The school has educated children aged between three months and 11 for nearly 150 years.
Currently, it costs £4,857 per term for pupils in years three to six. Parents of pre-prep pupils – reception to year two – are set back £4,100 each term.
In a letter to parents about the VAT proposal, seen by the Stray Ferret, the school wrote:
From April 2025, as a charity, we will no longer be allowed to claim 80% business rates relief, which will add in the order of £50,000 to our annual cost base.
It adds leaders have scrutinised finances and worked hard to reduce costs where possible in the preparation for the change. However, the school says increased costs make this “extremely challenging”.
The letter says:
Therefore, assuming the VAT comes into force in January 2025, (and at time of writing this letter, despite mounting pressure and reports in the press to delay the policy, this date continues to be a target for the government), we will need to pass on the full 20% VAT in the first term.
Once we know what VAT can be recovered, as we submit VAT returns, that saving will be passed on to parents in future, if possible, as we had mentioned in our previous letter dated June 7.
The school continually reviews finances to ensure it is investing in high-quality staff and delivering the best quality of education it can, the letter adds.
Parents will be contacted after the Budget, once the school has more details from the government and HMRC to outline a more solid plan.
Belmont Grosvenor has challenged the legislation as a member of the Independent Schools Council and last week went to Parliament to argue against the change.
When the Stray Ferret approached the school for comment, Charlie Brooksbank, chair of governors, said:
Belmont Grosvenor School, and the independent schools sector as a whole, continues to challenge the imposition of VAT on school fees and highlight the detrimental impact of this policy on our pupils, parents and local community.
Two of our school governors travelled to London last week to join representatives from the Independent Schools Council (ISC) and other independent schools from across the country, to lobby MPs.
Our parents are very supportive of BGS and appreciative of our open communication as we plan together for the future. Our pupil numbers have grown steadily over the past two years, and we have a steady flow of enquiries so there is also optimism amidst the current uncertainty.
The letter to parents said the Magic Tree Nursery and Pre-Reception would be exempt from the policy, as well as pupils with an Education and Health Care Plan.
Ashville College
Ashville College is a day and boarding school, which admits children up to the age of 18.
Day fees currently range from £3,721 per term up to £6,685 per term. For boarders, fees vary between £10,205 to £13,500.
However, Ashville announced in February boarding will end next year.
The Stray Ferret approached Ashville College for an update on its VAT plans, but it did not reveal how fees will be impacted.
Richard Rooze, the school’s bursar, said:
While we still await full details in next week’s Budget legislation, it does seem highly likely that VAT will be imposed on all independent school fees from January 1, 2025.
We have reassured parents that Ashville and its governors have been taking steps to manage this imposition as effectively as possible from the moment it was first suggested.
We are determined to keep the burden to a minimum by continuing to manage the College’s affairs effectively and efficiently to ensure long-term financial value for money.
We will confirm to parents Ashville’s approach as soon as possible once the law is finalised.
Mr Rooze added the school has explored “sensible” options to keep fees as economic as possible and to minimise the impact of the proposed legislation.
Queen Ethelburga’s Collegiate
Queen Ethelburga’s Collegiate is a day and boarding facility, split into four schools.
Chapter House accepts children aged from three months up to year five. It costs £4,225 per term for day pupils and nearly £12,000 for boarding.
King’s Magna teaches years six to nine, which costs between £6,175 or £12,355 per term, while Faculty and College cater to years ten to 13.
For years ten and 11, College and Faculty cost £6,745 for termly day fees and £12,940 for boarders.
Parents of sixth form pupils are currently set back either £7,160 or £13,420 per term.
A spokesperson for Queen Ethelburga’s did not disclose plans about changes to fees, but told the Stray Ferret the schools’ operations will not be restricted by the new policy.
They said:
Since the announcement was made that the introduction of VAT was a possibility, QE has been doing everything possible to mitigate against the impact this will have on our families.
What is important for us is that this policy will not mean that we will be implementing measures such as reducing teaching hours or cancelling activities.
We are committed to offering excellent value for money for our families and want to ensure our fees remain affordable.
We are communicating regularly with our families, and also liaising with our associations and representatives in the sector who are leading a united response on this issue.
The spokesperson added the school is a member of the Independent Schools Association, and the Independent Association of Prep Schools, and will provide parents with more detail after the Budget.
The Stray Ferret also contacted Ripon Grammar School, which is a state boarding school.
Tuition is free, but parents of boarding pupils pay between £14,163 and £16,282 per year.
However, a spokesperson said the new legislation would not apply to Ripon Grammar's boarding fees.
We also approached Queen Mary’s School and Brackenfield School for an update on their plans, but we did not receive responses.
HMRC also said schools will be able to reclaim VAT applied to good and services used to make taxable supplies, like education or boarding, which includes building work to the value of £250,000 or more.
It also would cover computer items costing £50,000 or more.
More information will likely be revealed at the Budget, which is on Wednesday (October 30).
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