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Looming Crisis: Private Schools Face Closures Amid VAT Hike


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Whitehall is preparing for a potential crisis in the private education sector as the imposition of VAT on school fees threatens to force many independent schools to close. The Independent Schools Council (ISC) has warned that the risk of closures is “very real,” prompting the government to draw up contingency plans to accommodate a potential surge in demand for state school places.

 

From January 1, private school fees will be subject to a 20% VAT increase. This change, combined with other financial pressures, is expected to disproportionately impact smaller schools with lower fees, especially in areas where competition is fierce. Government officials, using data from Companies House and other sources, are closely monitoring these at-risk institutions.  

 

Campaigners against the policy argue that the fee hike could push many parents to withdraw their children from private schools. "Some parents will simply be unable to afford the increased costs," the ISC’s chief executive, Julie Robinson, said. Treasury projections estimate that in the long term, 37,000 fewer children will attend private schools due to the tax, representing roughly 6% of the current private school population.  

 

The immediate impact is expected to be somewhat smaller but still significant. By the end of this academic year, around 3,000 children are projected to transfer from private to state schools. Government sources have expressed confidence in the state sector’s ability to handle the influx but are actively working on contingency plans. “We have to plan for the worst,” one official told *The Times*. “Officials are monitoring schools most at risk of closure to help local authorities prepare where numbers may spike.”  

 

Another source emphasized the challenge of the upcoming transition: “The government routinely monitors pupil movement between the independent and state sectors, but this year the VAT increase introduces an added layer of complexity.”  

 

The Office for Budget Responsibility (OBR) predicts that most private schools will pass on two-thirds of the increased costs to parents through higher fees. Some schools may also reduce their offerings to mitigate the financial burden, while others will attempt to absorb the costs through profit cuts and efficiency measures.  

 

Private schools are already grappling with declining enrollment. The ISC reports that 8,000 children left private schools after Labour's election in July, with an additional 2,500 following in subsequent months. Wales has seen the largest drop, with pupil numbers down by 5.15%, followed by Yorkshire at 2.63% and the southwest at 2.43%.  

 

Robinson voiced concerns about the government’s preparedness, stating, “I think the government has seriously underestimated the level of movement as a result of their policies. There are a lot of financial shocks building up on independent schools.” She also highlighted the potential strain on local authorities, noting that while there may be overall space in the state sector, availability in the right locations is uncertain.  

 

Further compounding the financial strain on private schools is a rise in business rates and an increase in employers’ national insurance contributions this spring. The VAT charge alone is projected to raise £1.8 billion annually but leaves schools with limited flexibility in managing their budgets.

 

Parents of children with special educational needs, who often rely on private schools due to inadequacies in state provision, are particularly concerned. “Families are incredibly committed to their children’s education and will make sacrifices to keep them in these schools for as long as possible,” one headteacher said, adding, “But no one is under any illusion that there won’t be further challenges ahead.”  

 

As the January deadline looms, the future of many private schools remains uncertain, with the financial and social consequences of these closures likely to resonate far beyond the independent education sector.

 

Based on a report by The Times 2024-12-28

 

Related:

Top Oxfordshire Prep School to Close Amid Controversial VAT Policy on Private Education

 

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Posted
5 hours ago, thaibeachlovers said:

It's going to be disaster when all those private school kids are suddenly sent to public schools.

Do the morons clowns in Labour never think about consequences of their actions?

Why should they even bother to think about the consequences of their actions, when it doesn't matter to them?

 

It is called jealousy, and dumbing down to the same abysmal level.

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Posted

Bring any schools that are no longer financially viable into the state sector. Problem solved.

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Posted
18 minutes ago, Bkk Brian said:

Useless blanket statement. For one, there are special private schools that provide the needs for children that are not available in the state sector.

 

An objection for objection's sake.

 

If there are 'special' facilities at these schools, why couldn't they be provided if the school was in the state sector?

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Posted
12 minutes ago, Nick Carter icp said:

 

   How would that be paid for ?

Raise taxes ?

 

It depends on the figures involved. Maybe the revenue raised from the improvision of the 20% VAT on the remaining private schools will generate enough revenue to cover the costs.

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Posted
38 minutes ago, RayC said:

 

An objection for objection's sake.

 

If there are 'special' facilities at these schools, why couldn't they be provided if the school was in the state sector?

Rubbish deflection. You made a blanket statement with no credible explanation of how. I gave you just one example that you missed.

 

If the state sector had all the services needed for SENDS there would be no need for the Special Schools. Get things right.

 

Special needs children not protected from private school VAT raid, says Bridget Phillipson

“I know how desperately let down they feel by a system that isn’t delivering and I will deliver a better state sector for children to make sure that there is more specialist support within mainstream settings.

https://www.telegraph.co.uk/politics/2024/10/27/special-needs-not-protected-labour-schools-vat-raid/

https://archive.ph/0KYmG

 

You should probably start looking in the related topic, link at the bottom of the OP for more info.

Posted
47 minutes ago, RayC said:

Bring any schools that are no longer financially viable into the state sector. Problem solved.

So force the closure of schools by imposing 20% VAT, then takeover and have to pay the rent or leases, and running costs on said schools when incorporating them into the State system?

Posted
7 minutes ago, Bkk Brian said:

Rubbish deflection. You made a blanket statement with no credible explanation of how. I gave you just one example that you missed.

 

If the state sector had all the services needed for SENDS there would be no need for the Special Schools. Get things right.

 

Special needs children not protected from private school VAT raid, says Bridget Phillipson

“I know how desperately let down they feel by a system that isn’t delivering and I will deliver a better state sector for children to make sure that there is more specialist support within mainstream settings.

https://www.telegraph.co.uk/politics/2024/10/27/special-needs-not-protected-labour-schools-vat-raid/

https://archive.ph/0KYmG

 

You should probably start looking in the related topic, link at the bottom of the OP for more info.

 

Nonsense.

 

You suggest that if a 'special needs' independent school was forced to close, the state would not be able to step into the breech. Why not? The infrastructure would be there. The staff could be offered teaching contracts within the state system. It could be a simple transfer of administration. Whether bureaucracy would prevent this happening is another matter.

 

Your newly introduced quote from The Telegraph is a prime example of a misleading headline and inference. It is true that 'Special needs' schools 

face 20% VAT on their fees, and State schools may well be currently failing pupils with 'special needs' - hardly something that can be lain at the feet of the Labour government - but the latter is not a consequence of the former as the Telegraph would like people to believe.

Posted

A real shame. I am walking around Bangkok Narathiwas area and even tho it looks like I am going back to Canada i still like it here very much. So many nice and quiet areas that are not tourist areas with relatively cheap real estate aboit to get even cheaper.

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Posted
21 minutes ago, phetphet said:

So force the closure of schools by imposing 20% VAT, then takeover and have to pay the rent or leases, and running costs on said schools when incorporating them into the State system?

 

Half of independent schools are run by companies who exist as profit-making enterprises. Imo nothing wrong with that. However, why should these companies - or their customers (the parents) - be exempted from paying VAT on the provision of these services when profit generating companies in other sectors are not?

 

The remaining half of independent schools are classified as charitable institutions. As charitable institutions, they enjoy significant financial benefits which is fair enough. However, again I don't understand why these institutions - or their customers - should be exempt from VAT.

 

If these institutions are brought into the public sector the costs will have to be borne by the state in the same way that all public sector service provision is. Of course, the opportunity to attend these schools - st the child meeting any 'special needs' criteria - should then be open to all children within the catchment area. 

Posted
1 hour ago, RayC said:

Bring any schools that are no longer financially viable into the state sector. Problem solved.

 

This 'over simplistic, dumbed down response' has to be one of the most ill thought out replies for a while...

 

You clearly were not being facetious and the reply was not a flippant pish-take...   But, did you think at all ???

 

Who pays for all these students suddenly on the state system ???....  who pays for the upkeep of the schools ? who pays for teachers and ancillary staff ????

 

Lets increase taxes to cover the problem an increase in tax caused in the first place !! 

 

 

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Posted
11 minutes ago, RayC said:

However, why should these companies - or their customers (the parents) - be exempted from paying VAT on the provision of these services when profit generating companies in other sectors are not?

 

Because of the extra pressure it would place on a state system that is already buckling.

 

 

11 minutes ago, RayC said:

However, again I don't understand why these institutions - or their customers - should be exempt from VAT.

 

You've made that patently clear... You don't understand.

 

 

Private schools remove a significant amount of pressure on the state system - bringing them back into the state system would apply extra pressure on the state system that requires greater funding and where does that money come from ?????  only one answer, an increase in tax to cover the shortfall. 

 

Thats why over taxation is fundamentally flawed and this governments answer to shortfalls exacerbates rather than resolves any issues.

 

 

 

 

 

 

Posted
1 hour ago, RayC said:

 

Nonsense.

 

You suggest that if a 'special needs' independent school was forced to close, the state would not be able to step into the breech. Why not? The infrastructure would be there. The staff could be offered teaching contracts within the state system. It could be a simple transfer of administration. Whether bureaucracy would prevent this happening is another matter.

 

Your newly introduced quote from The Telegraph is a prime example of a misleading headline and inference. It is true that 'Special needs' schools 

face 20% VAT on their fees, and State schools may well be currently failing pupils with 'special needs' - hardly something that can be lain at the feet of the Labour government - but the latter is not a consequence of the former as the Telegraph would like people to believe.

Here we go again, blaming the messenger the Telegraph in this case

 

No nonsense and stop making things up about what I suggest.

 

Mum-of-three Rebecca, from Somerset, believes the new fees are "unfair", she said: "If they can guarantee my child will turn up at a state school and they will get the help they need, I have no problem. But they can't."

https://www.bbc.com/news/articles/c0kjj40zrexo

 

Heading for court…

The policy may soon be tested as Sinclairslaw prepares to make a challenge at the High Court. The case involves a child refused an EHCP by the local authority. With no suitable state secondary school, her mother felt she had little choice but to fund an independent placement. It’s not clear if the parent appealed to the SEND Tribunal, as many others do. 98.3% who do, prevail in their appeal though it’s a long, hard road and not everyone can manage it. She claims it’s a violation of human rights, and it will be up to the courts to decide if it agrees.

https://www.specialneedsjungle.com/children-send-deserve-better-pawns-vat-wars/

 

Alexis Quinn, whose daughter is autistic, said adding VAT at the standard rate of 20% to fees will force many children with special educational needs into "unsuitable placements" in the state sector.

Ms Quinn has so far raised more than £72,000 to foot the cost of a legal challenge in the High Court.

https://www.bbc.com/news/articles/cwy7rgyljz4o

 

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Posted
2 hours ago, RayC said:

 

An objection for objection's sake.

 

If there are 'special' facilities at these schools, why couldn't they be provided if the school was in the state sector?

So the state will pay the higher salaries of the teachers?

 

The best teachers go into the private sector for a reason, now they will probably go abroad to teach

 

Some of the best brains in the UK are privately educated if, your idea is so left wing to think these schools would be run better by the state

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Posted
1 hour ago, richard_smith237 said:

 

This 'over simplistic, dumbed down response' has to be one of the most ill thought out replies for a while...

 

You clearly were not being facetious and the reply was not a flippant pish-take...   But, did you think at all ???

 

Who pays for all these students suddenly on the state system ???....  who pays for the upkeep of the schools ? who pays for teachers and ancillary staff ????

 

Lets increase taxes to cover the problem an increase in tax caused in the first place !! 

 

 

1 hour ago, richard_smith237 said:

 

Because of the extra pressure it would place on a state system that is already buckling.

 

You've made that patently clear... You don't understand.

 

Private schools remove a significant amount of pressure on the state system - bringing them back into the state system would apply extra pressure on the state system that requires greater funding and where does that money come from ?????  only one answer, an increase in tax to cover the shortfall. 

 

Thats why over taxation is fundamentally flawed and this governments answer to shortfalls exacerbates rather than resolves any issues.

 

 

My original post was slightly tongue-in-cheek but that's besides the point.

 

Talking of over-simplistic if you knew as much about taxation as you seemingly think you do, then you would realise that one of the tenets of a good taxation system is that it should be equitable. How is a 20% tax break for (relatively) wealthy consumers buying a service equitable?

 

If the state education system is already buckling as you suggest, then perhaps it requires increased investment. That increased investment will need to be funded from the government's coffers, unless you subscribe to the Liz Truss school of economic thought and believe that unfunded tax cuts, which lead to increased government borrowing costs, isn't a problem as we can cross our fingers and hope for growth from increased spending in the future despite the evidence suggesting otherwise.

 

Alternatively, we could stop all public spending, allow the private sector to pick up the slack and see how that turns out for ourselves and future generations.

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Posted
23 minutes ago, RayC said:

 

 

My original post was slightly tongue-in-cheek but that's besides the point.

 

Talking of over-simplistic if you knew as much about taxation as you seemingly think you do, then you would realise that one of the tenets of a good taxation system is that it should be equitable. How is a 20% tax break for (relatively) wealthy consumers buying a service equitable?

 

If the state education system is already buckling as you suggest, then perhaps it requires increased investment. That increased investment will need to be funded from the government's coffers, unless you subscribe to the Liz Truss school of economic thought and believe that unfunded tax cuts, which lead to increased government borrowing costs, isn't a problem as we can cross our fingers and hope for growth from increased spending in the future despite the evidence suggesting otherwise.

 

Alternatively, we could stop all public spending, allow the private sector to pick up the slack and see how that turns out for ourselves and future generations.

 

   You could charge parents of state school kids to pay for their education ?

   Make schools a business, like private schools 

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Posted
9 minutes ago, Nick Carter icp said:

 

   You could charge parents of state school kids to pay for their education ?

   Make schools a business, like private schools 

State schools are paid for out of taxes.

 

Private schools claim to be charities.

  • Haha 1
Posted
5 minutes ago, Chomper Higgot said:

State schools are paid for out of taxes.

 

Private schools claim to be charities.

Not all private schools are charities at all. Some are for profit, some not and some are on a charitable basis. 

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Posted
9 minutes ago, Chomper Higgot said:

State schools are paid for out of taxes.

 

Private schools claim to be charities.

 

True... many private schools in the UK claim charitable status. Historically, many of these schools were established as charities with the aim of providing education to children who could not afford it. Today, a significant proportion of private schools in the UK still operate as registered charities under the Charities Act which enables them relief from VAT.

 

Adding 20% VAT to private school fees will push many students into already overburdened state schools, exacerbating overcrowding and resource shortages without guaranteeing proportional reinvestment in public education.  

 

Whether a charity or not is somewhat beside the point and moot - Private schools ultimately benefit the state schooling system - taxing them, impacts this and ultimately also impacts state schools.

 

 

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Posted
59 minutes ago, Bkk Brian said:

Here we go again, blaming the messenger the Telegraph in this case

 

Take your own advice and stop making things up. Nowhere did I 'blame the messenger'. I pointed out that the Telegraph headline and article - or, at least the bit which you quoted - bore little relation to each other.

 

59 minutes ago, Bkk Brian said:

No nonsense and stop making things up about what I suggest.

 

I'm not making things up. How else to intrepret your post other than the state system is unable to step into the breech if a 'special needs' private school goes bust?

 

Your post: "For one, there are special private schools that provide the needs for children that are not available in the state sector."

 

59 minutes ago, Bkk Brian said:

Mum-of-three Rebecca, from Somerset, believes the new fees are "unfair", she said: "If they can guarantee my child will turn up at a state school and they will get the help they need, I have no problem. But they can't."

https://www.bbc.com/news/articles/c0kjj40zrexo

 

Heading for court…

The policy may soon be tested as Sinclairslaw prepares to make a challenge at the High Court. The case involves a child refused an EHCP by the local authority. With no suitable state secondary school, her mother felt she had little choice but to fund an independent placement. It’s not clear if the parent appealed to the SEND Tribunal, as many others do. 98.3% who do, prevail in their appeal though it’s a long, hard road and not everyone can manage it. She claims it’s a violation of human rights, and it will be up to the courts to decide if it agrees.

https://www.specialneedsjungle.com/children-send-deserve-better-pawns-vat-wars/

 

Alexis Quinn, whose daughter is autistic, said adding VAT at the standard rate of 20% to fees will force many children with special educational needs into "unsuitable placements" in the state sector.

Ms Quinn has so far raised more than £72,000 to foot the cost of a legal challenge in the High Court.

https://www.bbc.com/news/articles/cwy7rgyljz4o

 

 

Unfortunately, some people will lose out. It's almost inevitable whenever there is a policy change. If I was a parent whose child was affected I would no doubt be furious, however, as the article which you posted points out, "The government said the VAT rise is needed to improve education for the 93% of pupils outside the private system. ....students with an Education, Health and Care Plan (EHCP), which states their needs cannot be met in the state sector, will have their private school fees paid by the local authority and will be able to reclaim the VAT fee.

However, not all Send pupils have EHCP's, which has resulted in some parents paying the fees with their own money to ensure their children's needs are being met"

 

Whether education will be improved for the 93% as a result of this VAT increase remains to be seen.

Posted
5 minutes ago, richard_smith237 said:

 

 

 

The argument for applying 20% VAT to private school fees under the guise of "equity" is profoundly flawed and deeply naive. To suggest that taxing private education is a step toward fairness ignores the broader implications of this policy. Many families who send their children to private schools are not the ultra-wealthy caricatures often imagined but ordinary middle-income households who make significant sacrifices to prioritise their children’s education.

Branding these families as “relatively wealthy” and burdening them further is a myopic approach that misunderstands both equity and the dynamics of the education system. This move does little to address inequality and instead penalises those seeking better opportunities for their children.

 

The notion that the state education system can simply absorb a wave of students transitioning from private schools as fees inevitably rise is laughable. State schools are already buckling under the weight of overcrowded classrooms, underfunded resources, and staffing crises. Adding thousands of students to this system will not fix these problems; it will exacerbate them.

 

To assume that the additional tax revenue from VAT will somehow magically resolve these challenges is optimistic at best and delusional at worst. Governments have a long track record of diverting funds from such measures into unrelated projects, leaving both private and public schools worse off. This policy is a political vanity project masquerading as fiscal responsibility.

 

Your comments attempt to paint a dystopian picture of a world where private services are allowed to flourish, implying that this would somehow undermine the public good. This argument is absurd. The private education sector currently provides an invaluable service by alleviating pressure on state schools.

 

If private schools close or shrink under the weight of VAT, the state will bear the burden of educating an influx of students, a scenario that will cost far more than the revenue gained from this tax. This policy is the equivalent of shooting oneself in the foot and then wondering why walking becomes so difficult.

 

The suggestion that “increased investment” will solve the issues in state education is a simplistic platitude. Where will this magical investment come from when every decision to tax and spend is accompanied by bureaucratic inefficiencies and waste?, as is your comparison to Liz Truss-style economic policies, you've presented a red herring meant to distract from the inadequacies of this VAT proposal.

 

Thus, rather than engaging in serious debate about how to strengthen the education system as a whole, your argument resorts to patronising rhetoric that fails to address the real-world consequences.

 

If equity is the goal, there are far better ways to achieve it than taxing private schools into oblivion. Encouraging partnerships between private and state schools, sharing resources, and creating programs to support disadvantaged students would yield far greater benefits. Instead to support the demonisation of those who prioritise their children’s education and slapping a tax on that will do more harm than good.

 

This policy is not about fairness; it is a poorly disguised attempt to score political points at the expense of families, children, and the education system as a whole. 


The arrival in state schools of children from families motivated to get their children the best education will undoubtedly provide a driving force for improvement of all children in the schools they bless with their presence.

 

It’s why schools in catchment areas that include high numbers of parents with higher education do so well, to the extent of impacting house prices within their catchment area.

 

And then’s the added bonus of all those ‘excellent teachers’ leaving the private sector and seeking  jobs in the state schools that are in receipt of their share of the £2.3 Billion increase in spending on schools.

 

https://www.henrywiltshire.co.uk/news/buying/schools-affect-house-prices-london-property-market/#:~:text=London properties near good schools sell quickly&text=Research using data from Zoopla,elsewhere in the same postcode.

 

https://assets.publishing.service.gov.uk/media/674f2609d7e2693e0e47d02a/NFF_Policy_document.pdf

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