British General Election and VAT on School Fees

A new parliament will be elected in Britain on July 4. The possible changes in the balance of power in favor of the Labour Party could have an impact on the financial situation of British boarding schools. Independent schools in Britain, whether boarding or day schools, currently enjoy a VAT exemption as they are recognised as charities. This exemption has a long tradition dating back to the 19th century.

In the current election campaign, this tax exemption for independent schools is once again playing a significant role in the Labour Party's campaign programme. Although it is unclear whether and when changes will actually be implemented if the Labour Party wins the election, many independent schools - including our boarding schools - are preparing for the possible introduction of 20% VAT (Value Added Tax) on school fees as a precautionary measure. They will be able to reclaim part of this through deduction of VAT paid to third parties, and offset significant amounts through new revenue streams (summer courses, vacation lettings). Many schools have also been able to reduce their operating costs through energy-efficient renovations in recent years.

It is currently assumed that the schools will have to pass on about 8-12% of the additional costs from the introduction of VAT to the families. All schools are of course very keen to find a fair and balanced solution and minimise the financial impact on families. Many experts assume that the introduction of VAT on school fees will drag on legally, as Labour currently has no intention of introducing VAT on university tuition fees.

The current situation therefore is still very unclear. As soon as any concrete decisions are published, we will of course inform our families immediately.

Further information (added 27.06.24): Article on VAT and School Fees by the Good Schools Guide