The Government removed independent schools’ exemption from VAT on school fees on 1 January 2025.  Despite some of the language being used both by politicians and the media, this is a tax on the consumer rather than the organisation.  Therefore, VAT is now applied to all school fees and related educational services.  Any mitigation measures enacted by schools seek to relieve the overall burden on parents but cannot reduce or eliminate the VAT charged to parents.

In addition, the Government also made changes to business rate reliefs previously enjoyed by independent schools, which are charities, and these were removed in April 2025. This will have impacted all charitable independent schools significantly.

The government announced that these measures in England would generate over £1.6 billion in additional funds to be invested in the state education sector.  Those numbers are disputed by sector representative organisations such as the Independent Schools Council, and any promised investment is yet to be seen.

The school put considerable thought into this situation, in the hope that prudent and timely action would mean less uncertainty for parents and children in the coming years. Matters which were considered by the Governors include:

• The school previously absorbed VAT on certain goods and services, which we are now able to reclaim.

• Under the capital goods scheme, we can now recover a proportion of VAT on previous and future capital expenditure, which will, over several years, enable us to offset some of the impact of the VAT charge.

• It may be necessary in coming years to consider some areas of cost saving. This is standard practice in independent schools as a response to economic pressures which can impact the sector from time to time. This may, for example, be evident in terms of a small reduction in curricular provision (e.g very small group options at GCSE/A Level). It may be that our standard class size may slightly increase, although this would still leave them at a very healthy level and well below those in most local schools. We remain committed to managing costs and planning finances carefully to ensure that the outstanding provision for pupils at Hill House remains affordable for our parents.
• Some other schools must carry the continuing burden of significant rises in contributions to the national Teachers’ Pension Scheme. It is the case that Hill House has already dealt with this issue, and it will not be a factor in our calculations in the coming years.

• As a result of the prudent financial management of the school, we have been  in a position to mitigate to some extent the effects of any such imposition of VAT on parents.
• With VAT added, the gross fee has increased. However, due to the ability to recover a proportion of input VAT, the overall increase was less than the headline 20%.
• The impact on parents has been phased in as a ‘soft landing’ whereby the published pre-VAT school fees have been reduced.
• This meant that the impact on families from January 2025 was a net termly increase (inclusive of VAT) of 9%, with the balance of the cost being met by the school. 
• For the 2025/26 year, the Governors have taken the decision to further support our families by making the 2025/26 fee increase the final stage in the school’s recouping of the VAT charge from parents.
• Parents can be confident that any future fee increases at Hill House School will be related, as is normal, only to general cost increases.

• The school remains committed to maintaining a value-for-money fee structure and supporting families who suffer undue financial hardship.

• The popularity of Hill House in recent years, with numbers at a record high, waiting lists in some years, examination results being very strong and recent inspection outcomes being outstanding, all mean that demand for places is very strong and thus support the school’s ability to manage this challenge successfully.

• The recent investments in the school site, including the building of the Pavilion at Blaxton, and the current refurbishment of New Court, show an optimism for the future on behalf of the management and the governors.  This is based on a strong financial position and prudent cost management over the previous decade.

Hill House has always been at the forefront of educational excellence in the region, providing our pupils with an outstanding academic experience, whilst also offering unmatched extracurricular opportunities and pastoral care. We are truly proud of what our pupils achieve and what our school enables.

We believe that we have also shown ourselves in recent times to be resilient, creative and flexible in how we manage our school. We were proud of how we navigated COVID, and we hope that our response to the pandemic proves our ability to progress and improve our provision even when facing challenges. In the coming years, we will similarly continue to innovate; to build and to improve the wonderful experience for every child who attends Hill House School.

We believe that we have a duty both to our current and prospective pupils and parents. We want you to be able to commit to Hill House School confident in the knowledge that you will continue to be able to afford our school fees over the longer term. We believe that the lifelong benefits of a Hill House education are vast, and we want you to remain with us until your child leaves at the end of Sixth Form, having experienced the full range of experiences offered.

Therefore, we wanted to ensure that the impact of the imposition of VAT on your school fees was managed carefully, so that you could continue to enjoy these benefits and opportunities. All of our planning was designed to achieve this end whilst still allowing us to invest in your child’s education as you would hope and expect.