Top private school warns Reeves’ ‘unwelcome’ tax hikes will cost millions
One of the top private schools in the UK is “taking stock” as it warns Chancellor Rachel Reeves’ tax hikes will cost it millions.
Gresham’s School, whose former students include Sir James Dyson – who donated £35m in 2023 – added it will have to now take action to make sure it “does not become unaffordable for too many parents”.
The Norfolk-based school pointed to the impact the government’s decision to remove the VAT exemption on independent school fees and the removal of charitable relief on business rates as factors which will case “financial challenges”.
It added that the rise in employer National Insurance contributions which were also announced in the Autumn Budget will also contribute to the school paying millions more in costs a year.
However, Gresham’s School said it is in a “strong position” and “is very well placed to be innovative, to set the right course for the future, to remain vibrant and popular and to deliver an exceptional all-round education experience for our pupils”.
The comments have been included in the latest results for the school which show its coffers swelled to more than £50m during its latest financial year.
The Chancellor confirmed at the Autumn Budget that independent school fees are to be taxed 20 per cent.
At the time, the government said the move will benefit the Treasury to the tune of over £1bn per year, though the figure is widely disputed by critics of the scheme.
The government ended the charitable status of fee-paying schools which exempted them from paying 20 per cent value added tax (VAT) to the Treasury as of 1 January, 2025.
Any fees paid from 29 July, 2024, when the policy was first announced by the government, related to the term beginning in January 2025 are now subject to VAT.
The change is expected to raise £1.5bn in 2025-26, rising to £1.7bn by 2029-30, and the government also said English private schools with charitable status had their eligibility for business rates charitable rate relief removed from April 2025, bringing the total raised to £1.8bn by 2029/30.
As well as Sir James Dyson, former Gresham’s School students have included composer Benjamin Britten, the first BBC director general, Lord Reith, and Olivia Colman.
Gresham’s School ‘taking stock’ after tax rises
A statement included in the accounts said: “Financially, the school has remained strong, which has not only facilitated the busy programme of investment over the past few years, but also ensured the school is in a strong position to face the financial challenges arising from the government’s policy to remove the VAT exemption that applied to independent school fees, to remove charitable relief on business rates and to deal with the rise in employer National Insurance contributions announced in the Autumn 2024 Budget statement.
“Combined, all of these actions will cost millions and whilst the school had planned carefully for such an eventuality, it will not need to take stock to ensure its core educational offering remains strong and relevant and does not become unaffordable for too many parents.
“It is timely that the governing body is starting to prepare for the school’s next five-year strategic plan, which will run from 2025-2030, having delivered successfully the growth set out in the current strategic plan.
“Good education will rightly be at the core of the new plan, and though it will acknowledge the unwelcome challenges arising from government policy, we can have confidence that the school is very well placed to be innovative, to set the right course for the future, to remain vibrant and popular and to deliver an exceptional all-round education experience for our pupils.”