Eton College to pass on full cost of VAT on fees to parents

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Eton College has warned parents that most will face paying the full 20 per cent cost of the imposition of value added tax on fees, the latest UK school to do so.

The decision by England’s most famous fee-paying school was announced on Friday in a letter to parents from Lord Waldegrave of North Hill, the school’s provost — chair of its governing fellows — and Sir Nicholas Coleridge, who is due to take over as provost in September.

The school insisted in the letter that it had no scope to absorb the 20 per cent increase by narrowing its profits, as the government has suggested schools should consider doing.

“Eton does not currently run an operating surplus,” the letter said.

Only pupils receiving bursaries — means-tested awards offering reduced fees or free education — would be unaffected, the letter added.

Chancellor of the Exchequer Rachel Reeves in July confirmed that the government would go ahead with long-standing plans to end school fees’ VAT exemption from January 2025. It has been Labour party policy since 2021 to end the exemption and use the revenue raised, expected to reach about £1.5bn, to fund state schools.

The opposition Conservative party has bitterly opposed Labour’s stance on school fees, calling it a “tax on aspiration”.

“We have decided to maintain the fees for next year as announced in May,” the letter told parents. “Therefore, from January 2025, we regret that the cost of an Eton education is likely to rise by 20 per cent as a result of the introduction of VAT.”

Fees for boarding pupils without a bursary had been set at £52,749 for the 2024-25 academic year, meaning fees will rise to about £63,300 on an annual basis after January.

Eton’s decision comes the day after the Girls’ Day School Trust, a federation of 25 fee-paying girls’ schools, said it would raise fees by only 12 per cent from January, absorbing some of the extra costs through efficiencies.

Eton College is the best-known boys’ private school in England. Its former pupils include Prince of Wales Prince William and the former prime ministers Lord David Cameron and Boris Johnson.

The Eton letter said that, as well as the VAT change, private schools with charitable status would lose their previous right to 80 per cent relief on business rates from April 2025. The only benefit for the school is that, after it becomes subject to VAT, it will be able to reclaim the VAT it pays for some other services.

“The provost and fellows appreciate that the imposition of VAT is unwelcome news and are also keenly aware of the impact of this decision on all our parents,” the letter said. “Please be assured that we will continue to focus on the costs of the school moving forward, although we will not compromise on the quality of the education provided to your sons.”