Chancellor Rachel Reeves has underestimated the prepayment of fees by parents of private school students to avoid VAT. The top 50 independent schools collected £515 million in advance fees before the 20% VAT charge was implemented on January 1, 2025. This amount surpassed the Treasury's prediction of £450 million. Eton College individually accounted for over £50 million in these advance payments. The government claims the new VAT policy will still achieve its forecasted revenue of £1.8 billion by 2029-30, focusing on improving state school standards.
Eton College alone took in over £50 million in advance fees before the deadline - representing more than £10 million in VAT revenue foregone.
The Government insists the policy will still deliver on its revenue goals, expecting to raise £1.8 billion a year by 2029-30.
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