Private schools across Yorkshire are bracing for a difficult summer as the full impact of the government’s VAT decision begins to take hold.
Since January, private school fees have been subject to 20% VAT. Although the change came into effect at the start of the calendar year, it was introduced halfway through the academic year, leaving many parents and schools with limited options. Now, as families make decisions for the next school year, the consequences are starting to surface.
“We have already seen some private school closures in Yorkshire as the VAT change and cost challenges begin to bite,” said Richard Oddy, a partner at Azets, one of the UK’s top ten accountancy firms.
“But it will be over the summer holidays that the potential carnage in the private school sector, which educates approximately 620,000 children nationwide, will become evident.”
The Easter break was a key decision point for families, as many are required to give a term’s notice to withdraw a child. That means enrolment numbers for the next academic year may only become clear in the coming weeks.
Schools across Yorkshire are now working to confirm pupil numbers for September. According to the Independent Schools Council, 26,310 students attend 67 independent schools across Yorkshire and the Humber. While some schools have chosen to absorb the cost of VAT, many have passed on some or all of the increase to parents.
“There was much debate among schools about whether to pass on the VAT cost to parents and most did,” said Richard. “Some immediately applied the full 20%, others have gone for 10-15% and some sought competitive advantage by absorbing some or all of the increase and hoping to pick up fallout from other schools.”
Several long-standing schools in the region have already announced their closure. Queen Margaret’s School for Girls, near York, is due to shut on 5 July after 175 years. In a statement, the school said it had been unable to absorb the mounting financial pressures, citing VAT, increased insurance and pension costs, the end of business rates relief, and rising operational expenses.
Fulneck School in Pudsey, Leeds, will close its doors on 8 July after 270 years. The decision followed years of falling enrolment and rising costs. And Moorlands School in Leeds, founded in 1898, will close at the end of the autumn term, according to its trustees.
Private schools are also managing other cost increases. Since April, charitable schools in England have lost their business rates relief and now face full rates bills. Employers’ National Insurance costs have also gone up, further increasing the financial pressure.
Richard commented: “The well-known schools, backed by the wealthiest parents and overseas families, will get by, but the less well-known schools in the private sector are the ones at risk, including those in Yorkshire.”
He added: “It is highly unlikely that those casualties that we have seen to date will be the last. We are likely to see more closures, mergers, school consolidations, asset sales and property repurposing before the dust settles.”
Azets, which has offices in Leeds, Bradford and York, advises private schools to seek professional support and build clear plans to deal with financial pressure. This could include reviewing key performance indicators, adapting strategy, consolidating operations and considering property options.
The firm is also seeing signs of schools being acquired by consolidators – groups that buy and manage schools to benefit from shared services and economies of scale.
As the summer holidays approach, many private schools in Yorkshire will be watching closely to see whether they can weather the storm or will be forced to make difficult decisions before the new school year begins.
