FEES

Dear Parents,

One of the key manifesto commitments by the Labour Party was the levying of VAT on independent school fees and the removal of charitable tax relief on independent schools that are charities.  We have endeavoured to keep you informed of our work preparing for such a scenario.

On 29 July, HM Treasury released a technical paper outlining how these two commitments would be translated into policy, with VAT being introduced from January 2025 and business tax relief ending from April 2025.

Whilst neither of these were unexpected, as a sector, we had reasonably expected that VAT would come in later. Nevertheless, clarity from the Government is to be welcomed and we have spent the last few weeks reworking the budget, including updated assumptions about the new tax regime. It is, however, important to note that the VAT proposal is subject to consultation and more information about some aspects of how VAT will be applied are unlikely to be known ahead of the Budget on 30 October. The Government has also confirmed anti-forestalling measures, meaning any advance payment of school fees made on or after the 29 July 2024 will attract VAT at 20%. This means that any fees in advance payments we now receive will be subject to VAT from January.

We realise that waiting until then to communicate how we are handling these new taxes is too late to enable parents to plan; we are committed to being open and transparent with you, our parent community, and to communicate with you in as timely a manner as we can.

Following a detailed review of our budgets, the Governors met last week to agree the approach to fees for this academic year from January 2025 when we will be required by law to collect 20% VAT on behalf of HMRC.

From January, we will be able to reclaim some VAT each year on goods and services on which we have paid VAT (although this will be a small amount given that the majority of our income is spent on salaries) and capital goods scheme recoveries. Year on year, what we can claim back will vary, but these savings will be reflected in the calculations behind future fee setting exercises.

We have also reviewed spending decisions and budget allocations for this academic year. This includes non-teaching staffing where we are pausing recruitment to all but the most essential vacancies and making other spending decisions which result in operational efficiencies, whilst preserving educational excellence which is a hallmark of our experience for pupils.

The impact of these recoveries and additional cost savings means that we are able to cushion the introduction of VAT and share the burden of the increased costs with you. We will therefore offer a discount on the fees payable for Spring and Summer Term so that, after VAT is added at 20% to the underlying tuition fee, the net increase to parents will be partially mitigated.

Changes to fees

Tuition fees from Reception to Upper Sixth for the Spring and Summer Terms of the 2024/25 academic year will be as follows:

As we understand it there will be no VAT on nursery fee or lunches. When the final policy is confirmed, we anticipate that we will apply similar discounts to those applied to the tuition fee to associated services, such as additional lessons. VAT is also only due on fees paid, and takes account of fee remissions (for example scholarships and bursaries). A full table of all new fees will be published by us and sent to you once the government consultation is concluded and more information is known.

It is important to remind parents that fees on which VAT is now applied are reviewed each year. We will be looking afresh at our operations when term commences in September with a view to keeping our underlying fees as accessible as possible, whilst maintaining excellence in all we do. This includes continuing to invest in our schools and developing additional income streams. As in the past, any increase to the underlying fee base will be communicated at the end of Spring Term.

At each school’s speech day since I became Principal, I have finished my welcome by thanking every family for the commitment shown to the Foundation, because quite simply, without your support, our Foundation would not exist. Almost all our income comes from fees, and each one of you makes an active decision to invest significantly in your children’s education.

We do not want our education to become financially out of reach; an important aim in our Foundation strategic plan is to ensure our schools remain as financially accessible as possible. We are proud to educate so many children – not out of vanity, but because we are a local charity, with roots in the area stretching back many hundreds of years and we want to have as big an impact in the future as we have had in the past.

Warwick Schools Foundation has never stood still. It has changed with the times, responding to the political mores of the day. We know that that the next few years will bring us and the sector as a whole challenges, and we are committed to supporting all our community through them as best we can.

Thank you for your continued support of our schools.

Yours faithfully,

Richard Nicholson

Foundation Principal