In a bold move, Heath House Preparatory School in Blackheath, London, has announced its decision to absorb the full 20% VAT cost imposed by the Labour government. This strategy aims to maintain stability for current students and potentially attract new enrollees from competing independent schools.
The school's director, Harjesh Singh Kaushal, stated, "We believe this is the right thing to do to provide stability to pupils, to provide comfort to the parents and to avoid any kind of disruption." The institution plans to offset the £250,000 annual cost by increasing its student body by up to 25 pupils each year, representing a 20% growth from its current enrollment of 120 students.
This decision comes at a time when the UK private education sector, which contributes approximately £13.7 billion annually to the economy, faces significant challenges. The VAT implementation could potentially force out up to 7% of private school students, equivalent to 40,000 pupils across the country.
Heath House's approach stands in stark contrast to other prestigious institutions. Eton College, for instance, has announced a 20% fee increase, raising its annual cost to £63,000 starting January 2025. Similarly, Winchester College plans to implement a 10% fee hike, bringing its annual boarding fees to £57,040.
The preparatory school's unique position stems from its recent acquisition by Global Schools Group, a Singapore-based education firm, in November 2023. Despite being part of a larger organization, Heath House remains the group's sole British school, limiting its ability to reclaim VAT on other aspects of its business operations.
It's worth noting that private schools in the UK have been exempt from VAT since its introduction on April 1, 1973. The current standard VAT rate of 20% has been a point of contention, with the Labour Party first proposing the removal of this exemption in 2017.
While Heath House's decision is uncommon, it's not entirely unique. Adcote School, a girls' day and boarding school in Shrewsbury, has also committed to absorbing the VAT costs for the next two years. However, unlike Adcote's controversial billboard campaign, Heath House plans to rely on word-of-mouth to attract new students.
This strategic move by Heath House Preparatory School highlights the diverse responses within the UK's private education sector to the impending VAT changes. As the implementation date approaches, it remains to be seen how this decision will impact the school's enrollment and financial stability in the long term.