VAT on fees 'a step too far' for some smaller independent schools, warns ISC head of media

Asked whether the financial pressures facing the sector could mean "a whole part of the sector... the smaller, private primary school, will just cease to exist", Ms Cunnane said: "I think that there is always going to be independent education because parents really value choice." However, she added that for some schools that had closed over the past year, VAT had proven "a step too far".

Ms Cunnane was also asked whether one parent's experience of fees rising by 49 per cent in a very short period of time was "typical", to which she replied: "I would say that's very not typical. As you said at the top of your piece, the average fee went up by 22.8 per cent, that is including VAT. We know that, on average - excluding VAT - schools reduced their fees in January 2025, in order to cushion some of the blow from VAT."

She added: "The combination of asking parents to pay VAT on their fees, the scrapping of charitable business rates relief and the increase in National Insurance contributions for employers really did affect schools, and particularly those smaller schools who had already cut their fees, really to the bone... didn't really have that leeway to cushion the blow for parents as much as they would like."

On the subject of pensions, another factor impacting independent schools, Ms Cunnane said: "For those schools remaining in the Teachers' Pension Scheme, they are looking at an employer contribution of nearly 30 per cent, which is massive. It's a huge, huge outgoing for those schools and, like many small businesses, they are struggling. But unlike many small businesses, they have had a number of restrictions and taxes imposed on them by the government." 

Ms Derbyshire then highlighted research by Class Futures that found those independent schools to have closed down tended to be smaller, with 150 pupils or less. "The suggestion is that a whole part of the sector, perhaps the smaller, private primary school will just cease to exist", she said, before asking: "Do you think that's happening?" Ms Cunnane replied: "I think there is always going to be independent education because parents really value choice. What we do know is that those smaller schools are suffering, and some of those smaller schools have found VAT just a step too far. And that's particularly in areas like the north west and north east where the parental ability to pay may be slightly different to those in London and the south east. But what I do know is that the diversity of choice within independent education is what is really at risk. Independence within education allows parents the choice to have a different education than they would get in the state or to have extra support for a child who has special educational needs and disabilities... And that's really what's at risk here."