Eton College to raise fees by 20% following Labour’s VAT on private schools

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Eton College will raise its fees by 20 per cent as a result of the government’s removal of the VAT exemption on independent schools.

The elite school wrote to parents on Friday saying only those on bursaries would be exempt from the fee increase. The majority of students will be charged £63,000 per year from January – up from £52,749.

In the letter to parents, the school said that having “carefully considered the impact of the Government’s decision… 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”.

Labour’s end to tax breaks for private schools is widely expected to begin in January 2025. The policy will see VAT and business rates applied to private school fees. It was a key Labour manifesto pledge.

The party says the change will raise around £1.5 billion a year, ring-fenced for reinvestment into state education. This includes funding policies such as 6,500 new teachers and over 3,000 new nurseries.

Lord Waldegrave of North Hill, the outgoing provost, said in the letter to parents: “While this news was not unexpected, the provost and fellows regret that the Government has chosen to tax education in this way.

“Furthermore, we are disappointed that the introduction of VAT will take place part way through an academic year and at short notice. We recognise the concern that will be felt by many parents following this announcement.”

Lord Waldegrave also claimed that the government’s decision to end tax breaks for private schools would “add over £1.2 million per annum to our current cost base”.

Pupils on 100 per cent bursaries will not be affected by the change, the College said. Those on partial bursaries will see their fee discounts increased to cover the cost of the VAT.

While the government has suggested schools should absorb some of the costs to avoid passing on large fee hikes to parents, some schools have warned they cannot afford to do so.

The rate has not historically been applied to private schools due to a legal exemption for organisations that provide education. They also hold charitable status, which will not be removed as part of Labour’s changes.

Adding 20 per cent to the average private school fees would see day schools rise to £19,200 a year, on average, and to £46,800 for boarding schools, on average.

The Department for Education has been approached for comment.