SCRAPPING OF VAT EXEMPTION IS ANOTHER HEADACHE FOR INDEPENDENT SCHOOLS
The removal of independent schools’ exemption from VAT and business rates relief is just the latest in a series of challenges facing a sector already navigating a raft of financial and demographic problems, according to an expert.
The independent sector has already seen several closures and mergers since the Labour Party announced its plans to end the exemption whereby private schools do not have to pay the full 20 per cent rate of VAT on charges such as school fees.
After taking office in July, the new government then announced that the measure will take effect from January 2025 – earlier than many private schools had forecast and had budgeted for.
Now wealth management and professional advisory group Evelyn Partners is offering independent school heads the chance to get “match fit” by signing up for a tailored half-day workshop.
The sessions are being delivered in collaboration with law firm VWV and The Institute For Turnaround, as required.
The programme provides a school’s head, bursar and chair of governors the chance to meet with a team of advisory and VAT experts, coming away with market insights, personalised reference materials and a customised action plan for their establishment.
The workshop will cover:
VAT and cash implications – understanding the impact, plus strategies to mitigate and manage costs
Scenario planning – analysing demand sensitivity and adjusting pricing strategies
Options review – looking at options that schools may not realise they have
Market insights – learning what options are available and what others are doing
Alternative income sources – identifying and leveraging new and existing revenue streams
Governance and compliance – exploring governors’ responsibilities, and legal and financial compliance
The campaign is being led by Gail Seamark, senior consultant and head of charities in the advisory consulting team at Evelyn Partners in Bristol, and VAT director Owen Burn, who specialises in independent schools.
“Many independent schools already face considerable financial challenges, with the real or perceived implications of now having to increase their fees also impacting pupil numbers,” says Gail Seamark.
“Even if a school is in a strong financial position and relatively well prepared for future challenges, there are broader commercial and strategic actions that schools need to take right now to tackle – and indeed make the most of – macro-economic challenges and the changing competitive landscape.
“There has already been a demographic shift in terms of lower pupil numbers coming into the independent sector due to falling birthrates and many schools are already run in a very ‘lean’ way, so a major development such as the government’s VAT announcement can quickly become a problem.
“The changing landscape is impacting every independent school, although this particular measure will primarily affect ‘entry level’ independent schools rather than the household names that many people associate with the sector.
“Our half-day workshop will provide independent schools with a robust, realistic, scenario-tested game plan.”
Sian Champkin, partner in the corporate team at VWV, who also specialises in the education sector, says the removal of the VAT exemption is already driving M&A activity.
“We are not anticipating large numbers of pupils being pulled out of independent education but we will see a shrinkage of the market and we are already seeing a big increase in the number of school mergers in particular,” says Sian Champkin.
“There is a real appetite among senior schools looking to maintain the flow of pupils from their feeder schools whereas for prep schools, it may be a case of looking for ‘safety’ within a larger organisation.”
For further information please email gail.seamark@evelyn.com.
Read more of our news from Bristol and beyond at Bristol News https://directlocalbristol.co.uk/bristol-news/
