European diplomats lobby UK over plans to charge VAT on private education

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European embassies in London are lobbying the UK government to exempt international schools from the incoming 20 per cent VAT charge on private education. 

The removal of the current VAT exemption on private school fees is set to come into force in January 2025. This has triggered a backlash from European countries that fund international schools in the UK, who argue there is no such tax imposed on British independent schools abroad. 

Embassies fear the new VAT policy will make pupil fees unaffordable for many of their UK-based employees and put a strain on diplomatic ties. The UK government estimates the move will raise up to £1.5bn for investment in state schools, including on recruiting 6,500 teachers.

One official told the Financial Times that the Spanish embassy had taken part in the UK government’s recent public consultation on the proposals and requested that the Instituto Español Vicente Cañada Blanch (IEVCB) in London be granted an exemption from the incoming additional charge. 

IEVCB is registered as an independent school in the UK, but it is owned and operated by the Kingdom of Spain for “non-commercial governmental purposes in the exercise of public functions, as is public education,” the official said.

“It operates as a not-for-profit public school, providing free education to Spanish nationals resident in the UK and very reduced fees to British and other nationalities.” The embassy said it had not yet decided whether to start charging fees for Spanish pupils from January; it currently charges annual fees of around £7,000 for non-Spanish pupils.

The official said the Spanish embassy had raised the issue of “reciprocity”, given British schools in Spain — like all schools in the country — are exempt from VAT.  

A number of private schools in the UK have told parents they will be asked to pay the full 20 per cent cost of the new tax on fees, while others have said they are in a position to absorb some of the extra costs through efficiencies.

There are 11 French schools in the UK currently overseen and partially funded by the French government, including the Lycée Français Charles de Gaulle, in west London, which charges annual fees of up to £16,923. A 20 per cent increase could see these fees rise to over £20,000.

These schools follow the French national curriculum and prepare pupils for French national exams. 

A spokesperson for the French Embassy said that while it “does not seek to interfere in the legislative process”, diplomatic officials had “expressed concerns” over the impact the VAT change would have on these schools.

They said the purpose of the French government’s policy towards the schools is to fund and sustain “their full integration into the French schooling system and ensure they remain affordable to families abroad”.

The spokesperson added that these schools receive significant public funding from the French government and a scholarship programme was in place for French families “meeting social criteria”.

“They are not typical private schools”, they added. “We have been in contact with the British government and hope that the implementation of the reform will take into account the very distinctive nature of these schools, as is the case in France, where similar schools, such as the British School of Paris, are exempt from VAT.” 

German Embassy officials also confirmed they too were in contact with the UK government over this issue. The German school in Richmond, London, is partially funded by the German government, as are a number of German schools abroad.

A UK government spokesperson said: “We want to ensure all children have the best chance in life to succeed. Ending tax breaks on private schools will help to raise the revenue needed to fund our education priorities for next year, such as recruiting 6,500 new teachers.”