Imposition of VAT on Private School Fees

Summary

The request sought assessments, projections, and correspondence regarding the potential imposition of VAT on private school fees in the Isle of Man following UK Labour Party proposals. The Treasury disclosed internal correspondence with King William's College and the Buchan School discussing the existential threat of the policy and planned inter-departmental meetings to consider mitigation strategies.

Key Facts

• The request was made following a Treasury press release on 1st August 2024 regarding the removal of VAT exemption for private school fees.
• King William's College and the Buchan School identified the potential 20% VAT imposition as an existential threat to their operations.
• The Minister for the Treasury proposed a meeting between the Treasury and the Department for Enterprise to establish high-level policy criteria.
• Discussions are planned to involve the Department for Education, Sport and Culture to support independent education viability.
• The FOI case outcome was 'Not upheld' as of 23 June 2025.

Data Disclosed

• 2025-06-23
• 2025-03-03
• 1st August 2024
• 20 May 2024
• 23 January 2023
• 12 January 2023
• 16 months
• 20%
• 19th
• 20th
• 07 August 2024
• 109 pages
• 4 documents
• 4485917

Exemptions Cited

• s.25
• s.30

Original Request

Further to the Treasury press release (1st August 2024) highlighting the removal of the VAT exemption for private school and boarding fees I seek the following information: Such assessments and projections that have been made to show the estimated income that will be generated by the removal of this exemption; and Such correspondence that has been generated between the Treasury and on Island private education providers on this issue and any other aspects concerned with private school fees (this includes but is not limited to implications re removal of VAT exemption from such providers, data re private school income, expenses and general financial position, etc from 1st January 2024 date; and Such correspondence and other written documentation that has been generated internally within the Treasury and between the Treasury and other Government Departments and outside bodies (e.g. HMRC)) on this issue and private school revenue from 1st January 2024 date. For the avoidance of doubt this includes any potential alternative strategies in relation to private school fees e.g. discussion re exemptions, advice given on tax relief proposals etc; and Such risk assessment information held relating to the imposition of VAT on school and boarding fees; and

Data Tables (13)

Full Response Text

Appendix 1

Castletown  • Isle of Man • IM9 1TP Tel: +44 (0)1624 820400 • Web: www.kwc.im King William’s College, Company Limited by Guarantee. Registered in the Isle of Man Number 52022C. Charity Number 615 Bishop Barrow’s Foundation, Registered in the Isle of Man Number 000063M. Charity Number 1196 Dr Alex Allinson MHK Minister for the Treasury Government Office Douglas Isle of Man IM1 3PU 20 May 2024 Dear Minister I am writing to you in furtherance of our meeting on 23 January 2023, attended by myself and Kings William’s College), when we discussed our concerns as to the potential impact of proposals announced by the UK Labour Party to impose VAT on independent school fees. I enclose for reference purposes only the previous correspondence between the School and the Chief Minister, and a copy of your letter dated 12 January 2023 which formed the background to our meeting on the 23 January 2023. You will recall that at our meeting you concluded that it was then premature to discuss in detail what steps any future Labour administration may take on this subject, but helpfully confirmed that your door remained open and that it might become sensible for the School and the Government to monitor the situation and resume dialogue at a more appropriate time. Nearly 16 months down the line, we are undoubtedly in a UK election year. The prospect of a Labour administration, whilst by no means certain, appears to be the most likely result. If that was to be the case, in my opinion there is nothing that, at present, suggests that a Labour Government will not move to implement its policy to make independent school fees subject to VAT. Our working assumption is that VAT would be imposed at a rate of 20%. Document 2 s.25 s.30

Castletown  • Isle of Man • IM9 1TP Tel: +44 (0)1624 820400 • Web: www.kwc.im King William’s College, Company Limited by Guarantee. Registered in the Isle of Man Number 52022C. Charity Number 615 Bishop Barrow’s Foundation, Registered in the Isle of Man Number 000063M. Charity Number 1196

I believe that you acknowledged at our meeting that the Government recognises the importance to the Island of having an independent school offering, not only for existing residents, but also as part of the longer-term plans to grow the economically active population of the Island. In the circumstances, I think it is prudent, and potentially beneficial to all interested parties, for the School now to enter into more detailed discussion and analysis of this threat with the Government and would welcome your thoughts.

In conclusion, I would be grateful for an opportunity meet with you and Government Officers at an early date to reopen discussion on the above matters.

Yours sincerely

King William’s College and the Buchan School s.25 s.25 Dear , Thank you for your letter dated 20th May 2024 which now becomes even more relevant given the Prime Minister’s announcement of a General Election in July. I appreciate and recognise your previous assessment that the Labour party’s proposal to impose VAT on independent school fees is an existential threat to the ability of the school to continue to operate. I also appreciate the effect of delays and other issues regarding Visa applications and the effect this is having on attracting and retaining overseas students. I would like to suggest that Treasury meet with the Department for Enterprise to consider high level policy criteria before we discuss mitigations that could be employed to try and guarantee the continued viability of King William’s College and the Buchan School. I will aim to have these discussions following TT, involve the Department for Education, Sport and Culture, and then revert to you to arrange a meeting to discuss ways we can support independent education on our Island Yours sincerely, Document 4 s.25 attachments or following any links.  HI Sandra,   I am afraid I will be out of the office on Monday 19th returning on Tuesday 20th. I have various meetings when I get back so the Thursday or Friday of that week would be better for me.   Thank you   From: Simpson, Sandra Sandra.Simpson@gov.im Sent: 07 August 2024 12:24 To: Cc: Shuttleworth, Mark Mark.Shuttleworth@gov.im Subject: RE: KWC   CAUTION: This email originated from outside of the organisation. Do not click links or open attachments unless you recognise the sender and know the content is safe.     Hi                                                          Good to hear from you. Would Monday 19th August suit you at say 10.30 am? I’m happy to come to KWC to see you and would bring Mark Shuttleworth with me so that you would have a contact in Customs going forward.   If this time and date doesn’t suit just let me know. We are both available at other times that week.   Kindest regards   Sandra     Sandra Simpson FCCA, CTA The Collector   Customs and Immigration Division ' Tel: (+44) 01624 648172 * Email: Sandra.simpson@gov.im 8  Website: Customs and Excise       Sanctions and Export Control - Address: PO Box 6, Custom House, North Quay, Douglas, Isle of Man, IM99 1AG WARNING: If you are not the intended addressee of this e-mail you must not copy or deliver it to s.25 s.25 s.25 s.25 Regards     Sent from my iPhone   On 2 Aug 2024, at 10:02, Simpson, Sandra Sandra.Simpson@gov.im wrote: Morning   I’m very aware of the implications for KWC of the changes to the VAT regulations on the private school fees and wanted to offer any assistance we can. If you want to come and have a chat about it particularly in respect of VAT recovery on costs please get in touch.   Kindest regards   Sandie   Sandra Simpson FCCA, CTA The Collector   Customs and Immigration Division ' Tel: (+44) 01624 648172 * Email: Sandra.simpson@gov.im 8  Website: Customs and Excise       Sanctions and Export Control - Address: PO Box 6, Custom House, North Quay, Douglas, Isle of Man, IM99 1AG WARNING: If you are not the intended addressee of this e-mail you must not copy or deliver it to anyone else, or use it in an unauthorised manner.  Report VAT Fraud       Report Smuggling       Online Services P Please consider the environment before printing this email.   Isle of Man. Giving you freedom to flourish WARNING: This email message and any files transmitted with it are confidential and may be subject to legal privilege. You must not copy or deliver it to any other person or use the contents in any unauthorised manner without the express permission of the sender. If you are not the intended addressee of this e-mail, please delete it and notify the sender as soon as possible. No employee or agent is authorised to conclude any binding agreement on behalf of any of the Departments or Statutory Boards of the Isle of Man Government with any party by e-mail without express written confirmation by a Manager of the relevant Department or Statutory Board. RAAUE: S’preevaadjagh yn çhaghteraght post-l shoh chammah’s coadanyn erbee currit marish as ta shoh coadit ec y leigh. Cha nhegin diu coipal ny cur eh da peiagh erbee elley ny ymmydey yn chooid t’ayn er aght erbee dyn kied leayr veih’n choyrtagh. Mannagh nee shiu yn enmyssagh kiarit jeh’n phost-l shoh, doll-shiu magh eh, my sailliu, as cur-shiu fys da’n choyrtagh cha leah as oddys shiu. s.25 s.25 Cha nel kied currit da failleydagh ny jantagh erbee conaant y yannoo rish peiagh ny possan erbee lesh post-l er son Rheynn ny Boayrd Slattyssagh erbee jeh Reiltys Ellan Vannin dyn co-niartaghey scruit leayr veih Reireyder y Rheynn ny Boayrd Slattyssagh t’eh bentyn rish. This e-mail and any attachment(s) is strictly confidential and intended solely for the addressee. Access to this e-mail by anyone other than the intended recipient is unauthorized. If you are not the intended recipient, you must not use, copy, distribute, disclose or rely on this e-mail or any part of its contents. If you have reason to believe that you are not the intended recipient of this communication please notify the sender immediately, delete it and destroy all copies. Computer virus can be transmitted by e-mail. The recipient should check e-mail and any attachment(s) for the presence of viruses. King William’s College & the Buchan School accept no liability for any damage caused by any virus transmitted by this e-mail. King William’s College & the Buchan School reserve the right to read any e-mail or attachment(s) entering or leaving its systems from any source without prior notice. This e-mail and any attachment(s) is strictly confidential and intended solely for the addressee. Access to this e-mail by anyone other than the intended recipient is unauthorized. If you are not the intended recipient, you must not use, copy, distribute, disclose or rely on this e-mail or any part of its contents. If you have reason to believe that you are not the intended recipient of this communication please notify the sender immediately, delete it and destroy all copies. Computer virus can be transmitted by e-mail. The recipient should check e-mail and any attachment(s) for the presence of viruses. King William’s College & the Buchan School accept no liability for any damage caused by any virus transmitted by this e-mail. King William’s College & the Buchan School reserve the right to read any e-mail or attachment(s) entering or leaving its systems from any source without prior notice. This e-mail and any attachment(s) is strictly confidential and intended solely for the addressee. Access to this e-mail by anyone other than the intended recipient is unauthorized. If you are not the intended recipient, you must not use, copy, distribute, disclose or rely on this e-mail or any part of its contents. If you have reason to believe that you are not the intended recipient of this communication please notify the sender immediately, delete it and destroy all copies. Computer virus can be transmitted by e-mail. The recipient should check e-mail and any attachment(s) for the presence of viruses. King William’s College & the Buchan School accept no liability for any damage caused by any virus transmitted by this e-mail. King William’s College & the Buchan School reserve the right to read any e-mail or attachment(s) entering or leaving its systems from any source without prior notice. Douglas Isle of Man IM1 3PW British Isles Office Tel | (01624) 651517  Mobile | (07624) 427426 Alex.Allinson2@gov.im | www.tynwald.org.im | allinson@isleofman.com     From:

Sent: 21 August 2024 17:20 To: Allinson, Alex Alex.Allinson2@gov.im Cc: Subject: RE: King William's College   Caution: This email is from an external sender. Please take care before opening any attachments or following any links.  The Hon Dr Alex Allinson MHK   Dear Minister Allinson   I feel the need to contact you directly again to ask for a further and stronger assurance that Government is aligned with King Williams College to find a solution to the financial consequences of the decision to impose VAT on independent school fees in the Isle of Man.   You concluded your email on 31 July 2024 with a statement of commitment to secure a more sustainable future for King William’s College.  I continue to look to that commitment as, for the reasons previously explained, there is an ever increasing need to reassure current and future parents that the potential increase in fees caused by the imposition of VAT will not in fact be passed through to the consumer.   s.25 s.25 s.25 The school is working with officers from the Department for Enterprise (“DfE”).  We have provided a significant amount of information to DfE.  However, I am becoming more concerned that the DfE (perhaps because it is its norm when dealing with other commercial enterprises) is delaying any meaningful positive statement of commitment pending its deep dive on the school’s current position and future forecasts.  For instance, Mr Lewin has informed us that we should not make any public comments at this stage to the effect that the Government’s commitment to secure a sustainable future for the school is linked to keeping the fees previously announced for next year unchanged.  Frankly, we need to reach agreement with Government now to allow us to make public exactly such a statement to deliver a sustainable future.    In short, the unequivocal statement of support which we need now from Government is somehow being lost, or at least delayed, by and within the complexity of the process.  I appreciate the need to consider the financial position of the school.  However, I am concerned that earlier this week the school was asked by DfE to provide 13 additional pieces of information, much of which had previously been submitted albeit perhaps in a different format.  The school will continue to work with DfE but unless the Isle of Man Government will insulate us from the full effect of the VAT charge (and for a significant period of time), our business model (as shared with Government) will be seriously impaired, and we face an existential challenge.  To allow this to happen seems to me to be an unfortunate outcome: the Manx Government has committed to collect a tax which itself never intended to impose or collect, and consequently has not promised to spend on other areas of Government expenditure.  It does not seem unreasonable in those circumstances to ask for a clearer and unequivocal statement of meaningful support to the effect that the Government will work with us to “return” an equivalent sum, such that we can reassure our stakeholders now.  The precise mechanism can and should be subject to the ongoing review, but a clear strategic decision to give immediate meaning to your previous statement of commitment is still outstanding.  I fear that the level of commitment and its impact are being eroded in the machinations of the current processes.   Given where we are currently, we have informed DfE this week that we propose to issue a statement to our parents on this issue as part of our usual communications around GCSE results.  It is by necessity a holding statement and we have shared the proposed wording with DfE.  However, we need greater certainty.  I believe you fully understood this when we met on 19 July.  A month further on, I am frankly desperate to have some wording from Government which delivers that level of certainty and for this reason I would be most grateful if you would consider what more can be communicated to our parents before the end of this month.  Next week will see the start of a critical month in the school’s immediate financial future as parents make decisions on the back of tomorrow’s GCSE results.  Without further immediate action, the reality of VAT being imposed on fees will push some of these parents to remove their children from the school.   I look forward to hearing from you.  I am off Island from tomorrow until next week and have taken the liberty of copying in   Kind regards s.25 Dr Alex Allinson MHK

[Response truncated — full text is 109,273 characters]