VAT on school fees FAQs

Last updated: 14 November 2024
We will continue to update the FAQs as major developments are confirmed.

Our commitment

As the champion of girls-only education for more than 150 years, the GDST remains committed to our mission of helping girls learn without limits, so they go on to lead lives without limits. Our commitment to you is that we will continue to do whatever we can to keep fees as competitive as possible over the coming years, so that as many girls as possible continue to benefit from a GDST education in one of our schools.

What is the GDST doing to mitigate the impact?

Delivering an irresistible education alongside value for money has been a priority for us as we’ve worked to navigate these significant changes. Our schools benefit from being part of a family of 25 schools and we work together to ensure we are operating as efficiently as possible so that we can focus on what matters most – giving our students an excellent GDST education.

For many years our Trustees have taken important decisions to ensure the long-term financial sustainability of the GDST, putting us in a strong position. As a family of schools, the GDST is in a unique position to leverage efficiencies across our network. Our schools benefit from cost savings through shared services and our centralised procurement team utilises our purchasing power as a group to negotiate further cost efficiencies. This approach has seen us make significant savings over many years, most recently in the context of rising energy costs.

We have started further work to understand the impact of other business changes announced in the budget notably employer’s national insurance contributions and the National Living Wage. In addition, we are working through the details of what financial benefits the GDST can derive through the Capital Goods Scheme.

We are continuing work to ensure all our schools are operating as cost effectively as possible. As a not for profit organisation, the GDST continues to reinvest all income and funds received in the education provision delivered by our schools.

What impact will the Government’s policy have on GDST bursaries?

The GDST has a proud history of offering bursaries and scholarships to those who need them, and our commitment to reaching as many girls as possible, through bursaries and scholarships as well as partnerships with local state schools and our two academies, lies at the heart of our purpose as a charity. Our bursaries are part funded by restricted endowment funds, which can only be used in this way, which means we will be able to continue to support current students who benefit from these awards.

What impact is there on prepayment plans?

We are currently working through information published by the government in respect of the approach it will take to prepayments. It advises that HMRC stands ready to challenge the validity of lump sum payments and will seek to collect VAT on those fees where it is due. We appreciate the urgency for further information and we are working at pace to fully understand the position.

What are the GDST and ISC doing to challenge the government’s decision?

We understand the concern the upcoming VAT increase is having on our families. Please be assured that our team has been working hard since the government’s announcement to mitigate the impact as far as possible. We are a member of the Independent School Council (ISC) and the Independent Schools’ Bursars Association which are making representations to the government about the impact of VAT on school fees on behalf of the sector as a whole. The ISC, an umbrella body for seven associations representing independent schools, has voted to take legal action against the government’s decision to levy VAT on independent school fees. Further information can be found here. It is our understanding that, regardless of any legal challenge, we will be required to apply VAT at a rate of 20% to school fees from 1 January 2025.

Why can’t you reduce other spending, for example on your estate or on marketing?

We continue to work to ensure all our schools are operating as cost effectively as possible and to manage costs across our family of schools so that we can focus on what matters most – giving our students an excellent GDST education. Our teachers and staff are our most important asset, and this is reflected in the fact that 75% of the expenditure in schools is on our people. Their passion and dedication are the driving force behind our students’ education.

We also have a significant number of school buildings, many of them dating back more than 100 years. It is important that we invest in these buildings to make sure that they are in a fit condition for first class teaching and learning, compliant with health and safety standards and sustainable in all senses of the word. This includes making sure that any investment now will lead to cost efficiencies in the future. When education becomes a VAT-able supply, our capital expenditure will help us reduce the impact of the VAT on fees because we would be able to offset the VAT we currently pay, as we cannot currently recover this. The GDST spends a relatively small amount on marketing and our marketing function plays an important role in maintaining recruitment across our family of schools.

Will you change the sibling discount?

We have considered increasing our sibling discount to include families of two siblings but at this point are unable to provide a sibling discount for the second child. This is because we are continuing to assess the impact on student numbers in our schools and the implications on the Trust finances. We can assure you that we will do everything possible to mitigate the cost of VAT to our parents both this year and in future years. This of course is something that we will continue to review, as we commit to reducing the impact of VAT on our parents.