From January 2024, UK private school fees will be subject to a 20% Value Added Tax (VAT) as part of a policy introduced by the Labour government. This change, which was a key manifesto pledge, is expected to generate approximately £1.5 billion annually, which will be reinvested into state education, including funding new teachers and nurseries.
The introduction of VAT on private school fees will likely have significant impacts on both families and schools. The average day school fee, which currently stands at around £16,000, could rise to about £19,200 per year, while boarding school fees might increase from £39,000 to nearly £46,800 annually. This increase is causing concern among parents, many of whom may struggle to afford the additional costs, potentially leading to an exodus of students from private to state schools.
The policy has prompted warnings from educational experts that some private schools, particularly smaller ones, might face closures if they cannot absorb the increased costs. Schools may also have to make cuts or pass the full cost onto parents, which could further reduce enrollment numbers.
Moreover, there is concern that the state school system, already under pressure, might struggle to accommodate a sudden influx of students from private schools. Although there is some optimism that dropping birth rates could free up places in state schools, the situation varies by region, with some areas like London and the South East likely to face significant challenges.
Exceptions to the VAT policy include fees for children with Education, Health, and Care Plans (EHCPs) who require private education to meet their specific needs. However, this exemption does not extend to all children with special educational needs, raising concerns among affected families.
In response to these changes, some private schools are exploring ways to support families, such as offering bursaries or spreading out the cost of fees, but the overall financial burden on parents is expected to increase substantially.
This shift marks a significant change in the UK’s educational landscape, and its full impact on both the private and state sectors will become clearer as the policy is implemented.