Eton Makes 20% VAT Part of School Fee

Private schools will have to fork up VAT from 1 January 2025.  Many argue that the 20% VAT imposed can create certain challenges in the educational system of the country. However, others claim that this new rule can create a fairer environment among the wealthy and other taxpayers.

The VAT introduced aims to help the government raise revenue, which it is in desperate need of. Eton College, located in Windsor, UK, has already sent letters to the parents to provide additional fees.

Where Does Eton College Stand?

Eton College has started to send letters to the parents, claiming the news was not unexpected and expressing disappointment in the government choosing to tax education in this way. The school fees are currently at £52,749 per annum, but after imposing VAT, the fees will total £63,000 per annum from 1 January 2025. The college has published a statement that it has been anticipating this news for some time.

According to the provost of Eton College, “Parents will know that we have no latitude to reduce VAT itself: 20% will need to be added to whatever fee Eton charges, and so the amount due will be governed by the level of that fee.”

What Are the Government and Policy Considerations?

The government is trying to fill a £22 billion gap in public finances by introducing similar rules as the VAT on private school fees. The government aims to raise £1.5 billion through the VAT collected from private schools. In addition, the government has announced that private schools with charitable status will no longer be able to claim the 80% business rates relief from April 2025. This will add a further strain to private schools like Eton College.

With the business rates relief no longer applicable, £1.2 million is added to Eton College’s cost per annum. The government has also extended the 20% charge to extra-curricular educational supplies provided by private schools. So, all the educational services and vocational training provided by a private school will be applicable to VAT at the standard rate of 20%.

Conclusion

The imposition of VAT on private school fees will change the financial aspect of educational institutions like Eton College from 1 January 2025. The main aim of imposing VAT on private schools is to raise a significant amount of revenue for the government. As these changes come into effect, both schools and parents will need to look into and manage their finances.

Watch the video below to learn how the VAT rule on private school affects you!