It is stated by the new government that they will introduce a VAT charge of 20% on all independent school fees. For clarity, despite some of the language currently being used both by politicians and the media, this is a tax on the consumer rather than the organisation. Therefore, if implemented, it will need to be applied in full to all school fees. Any mitigation measures enacted by schools will seek to relieve the overall burden but cannot reduce or eliminate the VAT charged to parents.

In addition, it has been proposed that business rate reliefs enjoyed by independent schools, which are charities, will also be removed. This will add a direct new cost burden to independent schools.

The government have announced that these measures in England will generate over £1.6 billion in additional funds to be invested into the state education sector. Those numbers are disputed by sector representative organisations such as the Independent Schools Council.

The government has continued to state that these taxation measures will be implemented as soon as is reasonably possible.

It is most likely that the measures will be implemented in April or September 2025.

Because these timing factors are entirely at the discretion of the government, and they have not provided any additional clarity on the timescale of implementation beyond stating that it will be swiftly enacted, we are focused on ensuring that we have robust planning in place for both the anticipated time frame and the potential for early implementation.

The school has put considerable thought into this situation, in the hope that prudent and timely action will mean less uncertainty for parents and children in the coming years. Matters which have been, and are currently being considered by the Governors, include:

• The school currently absorbs VAT on certain goods and services, which in future we will be able to reclaim. It would be our intention to pass any such savings to parents, and therefore the final burden is expected to be below the 20% rate of VAT (currently estimated at 16%).
• Under the current capital goods scheme, we will be able to reclaim a proportion of VAT on previous and future capital expenditure, which will, over several years, enable us to offset some of the impact of a changing VAT regime.
• It may be necessary in coming years to consider some areas of cost saving. This is standard practice in independent schools as a response to economic pressures which can impact the sector from time to time. This may, for example, be evident in terms of a small reduction of curricular provision (e.g very small group options at GCSE/A Level). It may be that our standard class size may slightly increase, although this would still leave them at a very healthy level and well below those in most local schools. We remain committed to managing costs and planning finances carefully to ensure that the outstanding provision for pupils at Hill House remains affordable to our parents.
• Some other schools must carry the continuing burden of significant rises in contributions to the national Teachers’ Pension Scheme. It is the case that Hill House has already dealt with this issue, and it will not be a factor in our calculations in the coming years.

If the VAT exemption were removed from independent education:

• As a result of the prudent financial management of the school, we are in a position to mitigate to some extent the effects of any such imposition of VAT on parents.
• With VAT added, the gross fee would come to more than the current fee but fall short of the 20% increase being broadcast.
• The impact on parents will be phased in as a ‘soft landing’ whereby the published pre-VAT school fees would be reduced by a certain percentage for a period of time.  If the VAT exemption were removed, the net fee would reduce, to enable the impact on the gross fee for a number of years to be below the 16% level.
• This will allow parents to come to terms with this tax over a few years, rather than facing the full impact in year one.
• Full details of our plans will be announced in due course, as and when we have more certainty over policy changes and the date of introduction.
• The school remains committed to supporting families who suffer undue financial hardship.
• The popularity of Hill House in recent years, with numbers at a record high, waiting lists in some years, examination results very strong and recent inspection outcomes being outstanding, all mean that the demand for places is very strong and thus support the school’s ability to manage this challenge successfully.
• The recent investments in the school site, including the building of the Pavilion at Blaxton, and the current refurbishment of New Court, show optimism for the future on behalf of the management and the governors.  This is based on a strong financial position and prudent cost management over the previous decade.

Hill House has always been at the forefront of educational excellence in the region, providing our pupils with an outstanding academic experience, whilst also offering unmatched extracurricular opportunities and pastoral care. We are truly proud of what our pupils achieve and what our school enables.

We believe that we have also shown ourselves in recent times to be resilient, creative and flexible in how we manage our school. We were proud with how we navigated COVID, and we hope that our response to the pandemic proves our ability to progress and improve our provision even when facing challenges. In the coming years we will similarly continue to innovate; to build and to improve the wonderful experience for every child who attends Hill House School.

We believe that we have a duty both to our current and prospective pupils and parents. We want you to be able to commit to Hill House School confident in the knowledge that you will continue to be able to afford our school fees over the longer term. We believe that the lifelong benefits of a Hill House education are vast, and we want you to remain with us until your child leaves at the end of Sixth Form, having experienced the full range of experiences offered. Therefore, we want to ensure that the impact of the imposition of VAT on your school fees is managed carefully, so that you can continue to enjoy these benefits and opportunities. All of our planning is designed to achieve this end whilst still allowing us to invest in your child’s education as you would hope and expect.

We have always sought to ensure that our parents are well informed about their child’s school. We use the weekly emails to let parents know about our provision and opportunities, and this will continue to provide a means for timely communications. In addition, we have set up this page on our website, where parents can see the schools’ responses to ‘frequently asked questions’ about the impact of proposed government policies. We will write directly to our parents and prospective parents whenever external circumstances change, and at key points in the implementation of our mitigation strategy. By these means, we intend to keep our whole community well informed not only about the challenges being faced, but our responses.