The UK government has decided to remove VAT exemptions and charitable rates relief from private schools, coming into effect in January 2025.
This has been received with some backlash, as the policy’s aim to invest in state funded schools might actually hurt them the most.
As an oversubscribed and outstanding ofsted rated school, Parmiter’s, among plenty of schools across the UK, could become under pressure to fill vacancies due to the influx of pupils from independent to state schools.
The Institute for Fiscal Studies has predicted that the tax would raise around £1.3billion a year to go towards education in the public sector, improving the lives of 9 out of 10 students who attend a state school.
However, these calculations were made considering a small number of children would make the change from independent to private, meaning an unforeseen larger change may impact all schools negatively.
In April 2024, The Times conducted a survey on high net worth individuals, it found that 26% of respondents said that if VAT charges were imposed, they would have to remove their children from independent schools.
Taking this into consideration, the Adam Smith institute calculated the financial impact of a 25% migration scenario and found that the tax could generate a loss of £1.58billion.
Not only would the rising tax rates on independent schools threaten many of their existences, but it also has the potential to deliver the reverse effect and damage the state school sector further.
Parmiter’s school has an exceptional reputation, it is very sought after and oversubscribed every year.
Given the possible displacement of a large number of children from independent schools, the demand for the next best alternative state school will be high.
An even harder scrabble for admission at Parmiter’s will make it a tougher challenge for prospective parents looking to enrol their children.
Students from independent school backgrounds, who often come from higher-income families than those in state schools, will have an advantage over state school students in the preparation for admissions tests.
This suggests in the future, the uptake of students attending selective state schools via admissions tests may favour those from an independent school background.
Although there may not be a significantly negative impact on Parmiter’s specifically, on a national level it poses some difficulties.
The impact of independent schools being forced to close due to the number of students falling could present problems such as larger classroom sizes across many state schools, negatively impacting the education of the majority of children in the UK and putting a further strain on teachers.
Given the potential inability of the government to raise funds, this may also harm schools that are being stretched capacity wise, as they may struggle to be compensated for this by the government.
