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VAT FAQs

THE DEAN CLOSE FOUNDATION 

FAQs update to possible political changes affecting finances @ 28.08.24. 

The Labour Party has made it clear that there will be changes to the tax benefits that independent schools currently enjoy, with the HM Treasury issuing draft rules to private schools. There is a consultation period to the end of September followed by the Budget in November when changes will come into law.  

Will you add the full 20% of VAT to school fees? 

Our pledge to Dean Close parents is that we will minimise the impact of the introduction of VAT, should it come about, and we have calculated in the worst case the cost to parents will rise by 9.75%, with Dean Close Foundation finding slightly more than 50% of the cost of the VAT imposition in cost savings and income generation. We hope that some small elements of our school fee will be non-vatable which could further contain the actual increase but 9.75% is the worst-case scenario for your planning purposes. 

What will it look like for parents? 

  • From 1.1.25 invoices will include 20% VAT. 

  • In order to keep the total cost to parents manageable, Dean Close Foundation will reduce the headline fee before adding the VAT.  

  • The result will be an invoice with a fee (lower than the fee announced at the start of the year) plus VAT at 20% 

With a little more detail, the invoice will look like this: 

 

What is Dean Close Foundation doing to keep fees as low as possible? 

Here are some of the initiatives already underway which have helped keep the increase in fees consistently lower than the average sector fee rise over the last nine years. They will also help us to respond to the challenges which may lie ahead.  

  • Diversifying our income for example, through commercial lettings of our facilities. expanding our education and care to younger children through our day nurseries. 

  • Focusing on efficient and effective systems to achieve economies of scale and careful control of costs.  

  • Considering carefully how we are structured as a legal entity and how we contract with those who pay our school fees, i.e. parents or guardians.  

  • A one year across the board discretionary budget cut to offset impact. 

  • Cost savings in support services, e.g. catering in-house, energy future contracts. 

  • Recover VAT on purchases. 

  • Recover VAT on some larger past capital projects. 

How quickly will parents know of the final decision regarding VAT? 

We wrote to all parents on 23rd of August. We delivered a webinar on 27th of August. 

There is a consultation period to the end of September followed by the Budget in November when changes will come into law. Assuming no change to the government’s plans, we will issue our first invoices including VAT in November for the Lent Term’s fees. 

What are the current tax benefits of Charitable Status? 

Tax on profits (known as ‘surplus’ in a charity)  

Each year we strive to make a ‘surplus’ on our normal operational income and expenses. This allows us to save for large capital improvements, build reserves for a rainy day, or make a specific investment in projects to develop our educational offerings.  'For profit’ trading companies pay corporation taxes on their profits of between 20% and 25%. Because we are a charity, we do not pay this tax.  

Gift Aid 

Donations from UK taxpayers – for example, given as part of a fundraising campaign for specific facilities or bursary support for pupils – allow us to claim 25% gift aid from the UK government.  

Stamp Duty 

The Dean Close Foundation pays no tax on land and share transactions.  

Capital Gains 

DCF pays no tax on any gains from the sale of fixed assets.  

Business Rates  

As a charity we benefit from a reduced rate on the business rates. We benefit from the MBRR, Mandatory Business Rates Relief of 80% which means we only pay 20% of the chargeable rate. 

What else will be subject to VAT? 

Boarding fees  

Extras that are educational, e.g. music fees and tennis lessons, etc. 

WHAT NEXT? 

  • Full review for September 2025 fees takes place at Easter.  

  • Easter letter as normal advising fee for September. 

  • Research into extras fees. 

  • Military. We wait for Government’s stance on CEA/VAT. 

  • Amended Fees in Advance scheme 1.1.25.