A noticeable increase in loan enquiries for private school fees has emerged due to potential tax reforms by the Labour Party.
- Interest in financing private school fees has risen by 25% compared to last year.
- The School Fee Plan has reported a significant jump, with a 93% increase in loans taken by parents.
- Labour intends to remove VAT exemptions for private schools, introducing a 20% VAT charge on school fees.
- Concerns over rising fees have led some parents to pre-pay several years’ fees, although this carries potential tax complications.
A noticeable increase in loan enquiries for private school fees has emerged as parents brace for potential tax reforms proposed by the Labour Party. School Fee Plan, a finance company facilitating monthly payments of school fees, noted a 25% rise in interest compared to the previous year.
The School Fee Plan, utilised by 420 private schools including prominent institutions like Harrow, has reported a 93% increase in loans taken by parents since 2022. This surge is attributed to escalating private school fees and apprehension over Labour’s proposed tax policies, which could greatly impact both parents and schools.
Labour has reiterated its commitment to abolishing VAT exemptions for private schools, a move that would subject them to a 20% VAT charge if the party wins the general election. Stewart Ward, education director at School Fee Plan, has warned that this policy could force many parents to seek financial assistance, as the traffic and enquiries on their website have increased by 25% year-on-year.
A survey by The Telegraph earlier this year indicated that 95% of private school leaders anticipate increasing fees if Labour’s VAT charge is implemented. This has raised concerns about affordability, with the Institute for Fiscal Studies projecting a potential shift of 40,000 pupils from private to state schools.
Factors such as inflation, household income pressures, and the prospective VAT charge have driven parents towards financing options offered by School Fee Plan, which supports over 10,000 pupils annually at schools including Harrow, Dulwich College, and Reigate Grammar School. In particular schools like Wellingborough, where fees amount to £19,000 annually, about half the parents already use these financing services.
As a precautionary measure, some schools are encouraging parents to pre-pay several years’ fees through advance schemes to circumvent potential tax increases. However, this strategy could lead to tax issues with HMRC, and Labour has signalled a clampdown on such practices. The party plans to allocate the estimated £1.7 billion from the VAT on school fees to recruit 6,500 new state school teachers.
A Labour Party spokesperson confirmed their intention to invest in state education by employing over 6,500 new teachers, funded through the removal of tax breaks for private schools. They emphasised that independent schools, which have consistently raised fees above inflation for over a decade, are not compelled to pass these costs onto parents.
The significant increase in loan enquiries for private school fees highlights the financial concerns amid potential tax reforms by the Labour Party.
