Fees 2025-26

From 1 January 2025, all education and boarding services provided by an independent school will be subject to VAT at the standard rate of 20%. Below are answers to some questions that we expect parents will have. If you have further questions please send questions to:

vatquery@cheltenhamcollege.org

If you have paid Fees in Advance (FIA), please see questions 7 and 8.

VAT will be added to your bill at 20%. In January 2025 we were able to absorb some VAT, but changes in rate relief, National Insurance and minimum wage, has meant that it is no longer possible to do so.

Any VAT upside will be used to offset some of the impact of the government decision around rate relief, National Insurance and minimum wage. Cheltenham College will not be better off as a consequence of VAT.

For nursery classes provided by independent schools, only “classes made up wholly of children below compulsory school age remain exempt from VAT”. Therefore, only the fees for year groups prior to Reception are exempt from VAT. Fees for year groups starting from and including Reception will be subject to VAT from 1 January 2025.

Below is the worked example for a Spring 2025 term bill for a Fifth Form boarder:

Explanation of bill:

1. The fee exclusive of VAT will appear at the top of your bill, as previously.
2. Any eligible discounts (scholarships, bursaries, service discounts, etc) will then be deducted.
3. Any additional charges or supplements to the bill (boarding supplements, insurance) will then be added. If none apply, this will not appear on the bill i.e. in the above example, it would not have appeared on the bill.
4. This creates your ‘Net Taxable Fee’ value on which we have applied a new discount.
5. VAT is calculated at 20%, and added to create the Total Fee Payable.

All extras relating to the period from January 2025 will have VAT added at 20%. For example, 20% will be added to services supplied by College, including Music and LAMDA lessons, Learning Support, Additional English, and most after school clubs that have any coached or taught component. Late pick up in Prep will not attract VAT.

School trips are treated under different legislation, with VAT only being payable on the surplus from a trip (we do not make any surpluses from trips).

The original guidance suggested that we would be able to exempt certain elements of our total fee package, for example pupil lunches and welfare services, as this appeared the case when the first announcement was made on 29 July 2024. However, since the Autumn Budget 24 announcement on 30 October 2024 further clarification has confirmed that where VAT at 20% is being applied to the ‘single supply of private education’, everything directly associated with that supply would be taxed at the same rate.

Cheltenham College offers an education package, and as such the full fee constitutes a taxable supply.

Information only applicable to parents who have existing Fees in Advance Agreements (FIAs)

It will depend on how and when the payment was made.

The advice from our tax advisors, and from the Independent Schools Bursars’ Association, is that FIA schemes that are longstanding and properly constructed will enable those who made payments under this scheme for three terms or more, prior to 29 July 2024, for fees due from 1 January 2025, to be treated as Exempt supplies on the amounts paid under the agreement schedule.

The existence of a formal FIA agreement is critical to meet these criteria.

From 1 January 2025, any shortfall between a term’s fee and the fees paid in advance (FIA) will be taxable at 20%, as will extras charges which are billed separately.

Information only applicable to parents who have existing Fees in Advance Agreements (FIAs)

Below is the worked example for a Spring 2025 term bill for a day boarding pupil.

Explanation of bill:

1. The fee exclusive of VAT will appear at the top of your bill, as previously.
2. Any eligible discounts (scholarships, bursaries, service discounts, etc) will then be deducted.
3. Any additional charges or supplements to the bill (boarding supplements, insurance) will then be added. If none apply, this will not appear on the bill. In this case the day boarding supplement has been added.
4. Fees in Advance Scheme
5. The amount paid under a formal FIA agreement for the Spring term 2025 (and onwards) is treated as an Exempt element of the total fee, and therefore deducted.
6. This creates your ‘Net Taxable Fee’ value on which we have applied a new discount (6).*Two lines are shown on the face of your bill as these are the adjustments necessary within our billing software to identify the taxable FIA shortfall of the total fee (i.e. following all fee discounts and your FIA Exempt deduction). The first line identifies the shortfall, and this appears as a negative value. The second line creates the taxable shortfall value labelled as ‘Fees (Standard Rated) on which discount (6) is applied. We appreciate this may seem confusing, but unfortunately, our billing software is unable to simplify these adjustments into one line.
7. VAT is calculated at 20%, and added to create the Total Fee Payable