Unintentional Consequences of the VAT on Independent Schools

I recently watched several presentations from the Independent Schools Show (ISS) on YouTube. One topic dominated many discussions: the imposition of VAT on independent schools. Here, I want to explore the unintended consequences of this tax.

Why VAT on Independent Schools?

Let’s face it: the government is introducing this policy for financial reasons. While it could have been driven by motives like religious control, curriculum control, or political gain, these topics haven’t been in the news recently. For now, it’s safe to assume the primary reason is revenue generation.

Let’s start with the cost of educating one student in a state school, assuming no additional needs. According to the UK government:

“On a per-pupil basis, the total funding allocated to schools for 5-16-year-old

pupils, in cash terms, in 2024-25 was £7,690.”

This means that, for one academic year, it costs the taxpayer approximately £7,690. Over 13 years of education (not accounting for inflation), this totals £126,970 per student.

How Much Do Independent Schools Cost?

The fees for independent schools in the UK vary significantly depending on the age of the student, the school’s reputation, and its location. Annual fees can range from £3,000 to £57,000, with some examples below:

● Lower-cost schools may charge similar amounts to state funding per pupil.

● Higher-end schools, however, can far exceed this range, especially when factoring in additional costs like boarding, meals, examination fees, and extracurricular activities.

Independent schools offer opportunities that state schools often struggle to match, including smaller class sizes (typically fewer than 20 students), extensive extracurricular programs, and dedicated pastoral care. For many families, these factors justify the premium costs.

Consequences of VAT on Independent Schools

House Prices

House prices around schools with Good or Outstanding OFSTED ratings are likely to rise further. Families unable to afford independent school fees may instead compete to live in these desirable catchment areas. This demand will create a premium, pricing out lower-income families. The cost of education, once paid via school fees, shifts to the housing market.

Quick Move Now has highlighted this trend, suggesting that the government’s expected revenue from VAT may instead inflate property prices in certain areas. For example, properties near top-rated schools can command a premium of £100,000 or more. Read more here.

From personal experience, friends living just outside the M25—both teachers—moved to a specific catchment area for their children’s schooling. They observed that, “this particular area is expensive because of the secondary school.”

Pressure on Local Schools

As independent school students shift to state schools, local institutions will face increased pressure. The application process for desirable schools is already highly competitive, with families prioritizing anecdotes, school visits, catchment areas, and reputation to make their decisions.

Many state schools may technically have space on paper but lack the infrastructure to comfortably accommodate additional students. Even adding just two more pupils per classroom can make a room feel overcrowded, impacting the learning environment.

Special Education Needs (SEN) and Education Health Care Plans (EHCPs)

Local Authorities (LAs) often begin by declining requests for additional support, leaving parents, schools, and staff to prove a child’s needs. Why? Budget constraints.

While LA budgets have increased in cash terms by over 120% since 2010, in real terms, per-pupil funding has decreased by 18% (IFS, 2024).

An EHCP is a legal document requiring schools to provide tailored support for students. Costs can range from £10,000 to £20,000 per student annually, including expenses like hiring additional staff or providing therapy. The question remains: where will this money come from?

Independent schools often offer strong SEN support, but VAT could erode their ability to do so, placing greater strain on already stretched state resources.

Final Thoughts

The consequences of imposing VAT on independent schools extend far beyond generating

additional government revenue. Key issues to consider include:

● The fairness of taxing families who opt to pay for their child’s education.

● The potential widening of the social divide.

● The shifting burden of education costs onto housing and local schools.

● The strain on SEN and EHCP resources.

These concerns deserve deeper discussion and careful evaluation. At a glance, this policy appears to create more problems than it solves, and its long-term impact on families and the education system could be profound.

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