Concerns are rising among operators of summer schools that price hikes from independent schools for premises rental may undermine business operations.
Labour’s Budget – revealed earlier this month – made good on the party’s election promise to make private schools pay the VAT tax on their fees, prompting a furious response from schools and an upcoming legal challenge to try and block the new policy.
Under the plans, private schools will have to pay a 20% tax on the fees they are paid by parents, with some slapping the full increase onto their fees and others choosing to absorb some of the additional costs. (According to experts, fees are expected to surge by an average of 10-15%.)
But for independent schools offering up their facilities for summer school operations – the outlook and impact is uncertain on those renting their school grounds, classrooms and accommodation.
Jane Dancaster is CEO of Wimbledon School of English – which operates a buoyant English Summer Camps business. She told The PIE that some schools are choosing to pass the added costs onto summer school providers or reimagine their pricing model for summer rentals.
“[Operators] are passing the prices on to us, but they’re inflating the prices as well,” she said.
“So one provider has put their fees to us up by 50% because they said they’ve been asked by the governors to claw back money from every source they can. And I think we’ve been seen as a bit of a soft target.”
“I think we’ve been seen as a bit of a soft target”
Jane Dancaster, Wimbledon School of English
Another operator told The PIE that some schools were moving to Airbnb-style “per night” rental rates which had dramatically increased costs.
Bethan Hudson, director of the British Association of Independent Schools with International Students (BAISIS), confirmed, “Post-Budget, we are still receiving lots of queries on whether summer schools will be caught up in the VAT policy.”
Tregarran Percival, chief operating officer of UK Language Courses (UKLC), also operates summer programmes at school centres such as Bootham School, York; Clifton College in Bristol and Queen Anne’s School, Reading.
He told The PIE that the sector has been very concerned about the impact of the VAT policy – but good advocacy from English UK had helped highlight “the unintended consequences on our sector to the government”.
“I’m not sure that there is yet a shared understanding amongst either private language schools or private boarding schools of the impact on them,” he shared.
Private schools, who are our key suppliers as summer venues, are scrambling in different ways to review summer lettings
Tregarran Percival, UKLC
He pointed out that this uncertainty has had a variable impact on fees for upcoming programmes.
“One real impact is on pricing of junior courses in the market,” he told The PIE. “Language schools took different approaches to the risk/likelihood of being charged VAT on their facilities, with some increasing their prices to include an additional 20% increases in costs from venue private boarding schools, some factoring ‘some’ increase in the price to hedge against an increase, and some not adding the likely cost and promising agents they would swallow any increase in 2025.
He predicted that the pricing in the market for summer language courses will have slightly more variance than might be the case in ‘normal’ years.
” Obviously there is an indirect impact, with private schools, who are our key suppliers as summer venues, scrambling in different ways to review summer lettings and how they contribute to their commercial operation in the context of their own VAT hit,” Percival added.
John Murphie, chief operating officer of the Institute of Business and School Administrators (IBSA), told The PIE: “Schools are being very careful on this issue and the guidance from HMRC is being followed, and where ambiguous, questioned.
“Teaching English as a foreign language is exempt under the draft legislation revised on 30 October 2024. But, the other activities that take place will be subject to VAT so, the fees will be higher overall but the core provision of English being taught as a foreign language will be exempt.”
