The UK government has said about 40,000 students may quit private schools if a proposed value-added tax (VAT) of 20 per cent is levied on their school fees, but Hong Kong education consultants expect the extra cost will not affect demand from parents in the city who prefer British private institutions.
The consultants added the VAT roll-out was likely to be charged in phases, while the schools might not pass on all the tax burden to parents.
The independent school sector in the UK admitted more than 62,000 overseas students in 2024, and pupils from mainland China and Hong Kong comprise the largest groups with 5,824 and 5,075 pupils, respectively, according to the annual census conducted by the country’s Independent Schools Council.
British finance minister Rachel Reeves on Monday revealed a proposal to introduce 20 per cent VAT on private school fees from next January 1. VAT will also apply to prepayment of fees, an arrangement some private schools may have offered parents in hope of avoiding the tax.
A consultation on the proposal will run for seven weeks until September 15, during which the UK government will consider stakeholders’ feedback.
A government document published after Reeves’ speech revealed that UK authorities expected the new 20 per cent tax would drive away some private school parents.
“The government recognises that these policy changes may lead to increased costs for some parents and carers, and that some pupils may subsequently move into the state education sector,” it said.
But it added the number of students who might switch schools as a result of these changes represented a very small proportion of the overall figure in the state sector.
“Even if pupil displacement is somewhat above the Institute for Fiscal Studies’ estimated range of up to 40,000, this is still likely to represent less than one per cent of total UK state school pupils of more than 9 million,” it said.
More than 560,000 students attend British independent schools, with about 11.3 per cent from overseas.
“The government is therefore confident that the state sector will be able to accommodate any additional pupils and that there will not be a significant impact on the state education system as a whole,” the authorities noted.
Julie Robinson, CEO of the Independent Schools Council, said in several videos posted on its Facebook page in June and July that a sudden increase in fees would make independent provision unaffordable for many families.
“This would have a knock-on effect on the already stretched state sector, as pupil movement would intensify competition for places,” she said.
Robinson added the proposal would push a number of schools into deficit or even closure as small independent ones operated on very tight margins. She noted that some parents chose independent schools for their children because of special educational needs, disabilities and religion.
Samuel Chan Sze-ming, founder of Britannia StudyLink, a Hong Kong business mainly helping students to enrol in British private schools, said he expected there would be little impact on the number of pupils signing up for independent institutions in the UK as most were wealthy enough to afford the price increase.
“The proposal has been floated for some time and many parents expected that it will be announced soon and are so ready for it,” he said.
“I do not think all schools will increase their school fees by 20 per cent immediately and shift all the burden to students. Instead, I think it will be increased in phases with some raising tuition fees by 3 per cent.”
He said the quality of a UK private school education was still competitive when compared with that of other countries and attracted parents from Hong Kong, and the city’s currency was still strong against the pound.
He added top UK private schools, such as Eton College or Harrow, would by no means be affected by the proposal, while small institutions located in remote or coastal areas would be hit the most.
Leo Chan Tsz-chung, founder of Leo Education specialising in British independent schools, said he believed the proposal would deter some parents who were planning on sending their children to Britain.
“Now, they may have second thoughts or delay their plans as the fees are going to rise. But I think the schools will not add the fees in one go but will do it in phases,” he said.
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