A prestigious private school has said it may be forced to make job cuts due to the Labour government’s removal of VAT exemption on school fees.
Edinburgh-based Fettes College – where former Prime Minister Tony Blair is among alumni – has said the introduction of VAT on school fees contributed to the “difficult” decision to “right size our staffing model”.
Total pupils enrolled slipped to 751 in August 2024, down from 780 the previous year.
The school has opened a consultation process for both teaching and operational staff in order to reduce headcount, according to The Scotsman.
Chancellor Rachel Reeves confirmed the removal of private school’s VAT exemption in her maiden budget, introducing a 20 per cent tax on independent school fees.
The tax hike came into effect from January 1 2025.
City AM reported earlier this month Gresham’s School – whose former students include Sir James Dyson – warned it would have to take action to make sure it “does not become unaffordable for too many parents” after VAT changes.
Private schools losing pupils after Labour’s tax grab
The Independent Schools Council revealed that about 8,000 children had been pulled out of private schools before the new academic year in December.
A group of families with children at private schools took their fight to the High Court earlier this year as they argued the government’s tax grab infringed on the pupil’s human rights.
But in the judgement published by Mr Justice Chamberlain, Dame Victoria Sharp and Lord Justice Newey earlier this month, they concluded that even though the legislation does interfere with some of the appellants’ human rights, there was a “broad margin of discretion in deciding how to balance the interests of those adversely affected by the policy against the interests of others who may gain from public provision funded by the money it will raise”.
Ministers argued the removal of VAT exemptions on private schools would benefit the wider education sector, specifically the 94 per cent of pupils attending state schools.
A spokesman for Fettes College said the sector is facing a “tough time” and requested privacy for the staff involved.
They added: “Various factors have conspired to increase costs on all organisations and schools are not immune, particularly with the recent imposition of VAT on school fees and rise in national insurance contributions…
“These headwinds obviously affect our families too and our parents need to be certain that we are taking the necessary decisions to run the school efficiently and to use their money effectively.”
