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UK Private School VAT Proposal May Not Deter Hong Kong Parents, Say Education Consultants

July 30, 2024July 30, 2024By Saanvi Sharma
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UK Private School VAT Proposal May Not Deter Hong Kong Parents, Say Education Consultants

The UK government’s proposal to introduce a 20% value-added tax (VAT) on private school fees could lead to an exodus of around 40,000 students from these institutions, according to estimates. However, Hong Kong education consultants believe the added cost is unlikely to deter parents in the city who favor British private schools.

The proposed tax, unveiled by British finance minister Rachel Reeves, is set to take effect from January 1. It will apply not only to regular fees but also to prepayment arrangements, which some private schools offer to help parents avoid the tax.

The consultation period for the proposal runs until September 15, during which stakeholders can provide feedback. The government acknowledges that the policy may lead to increased costs for some parents, potentially pushing students into the state education sector. However, they estimate this shift will represent less than 1% of the more than 9 million pupils in UK state schools.

Over 560,000 students currently attend British independent schools, with approximately 11.3% being international students. Among these, pupils from mainland China and Hong Kong form significant groups, with 5,824 and 5,075 students respectively, according to the Independent Schools Council’s 2024 census.

Julie Robinson, CEO of the Independent Schools Council, warned that the sudden fee hike could make private education unaffordable for many families, exacerbating competition for places in the already strained state sector. She also noted that some smaller independent schools might face financial challenges or even closure due to tight operating margins.

Hong Kong-based education consultants, however, remain optimistic about the continued interest in UK private schools. Samuel Chan Sze-ming, founder of Britannia StudyLink, which assists Hong Kong students in enrolling in British private schools, suggested that the wealth of most parents would cushion the impact of the proposed tax. He noted that schools might phase in fee increases rather than imposing the full 20% hike immediately.

Leo Chan Tsz-chung, founder of Leo Education, which specializes in British independent schools, acknowledged that the proposal might cause some parents to reconsider or delay plans to send their children to the UK. However, he also believes that fee increases will likely be gradual, minimizing the immediate impact on families.

The VAT proposal, while potentially significant, may not fundamentally alter the appeal of UK private education for many Hong Kong families, particularly given the competitive quality of education and favorable currency exchange rates.