The UK Treasury recently rolled out one such exciting initiative. It will eventually reimburse Value Added Tax (VAT) charges on fees levied by two notable educational institutions in Northern Ireland: Royal School Dungannon and Royal School Armagh. This decision follows closely behind the UK government adding VAT to fees for non-UK boarders from Jan 2025. The reimbursement will only be given to students from the UK and European Union (EU).
About 690 pupils are supported by a boarding department at Royal School Dungannon. About 55 of those students are residential during the term time. The public institution charges fees to boarding families, which range from £10,000 to £16,000 per year. Dr. David Burnett, the principal of Royal School Dungannon, shared his concerns regarding the VAT legislation. He thinks it will be a real game-changer for schools in Northern Ireland.
“Similar schools exist in England and are usually referred to as state boarding schools,” Dr. Burnett stated. He pointed out that English state boarding schools have been left out of the VAT legislation from the very start. Spelling… That’s why he says this exclusion places Northern Irish schools at an unfair disadvantage.
The new targeted VAT exemptions are meant to contribute to funding of more than £1.5 billion by 2029/30. This funding will help enable the recruitment of 6,500 new teachers in England. Yet this ambitious initiative has drawn opposition from a broad range of stakeholders. Education Minister Paul Givan emphasized that fee-paying schools in Northern Ireland are completely different from those in England.
Dr Burnett noted that the Northern Ireland boarding school community had decreased over the past few decades. These schools remain indispensable to marketing the region to international students and strengthening the local economy. He highlighted that Royal School Armagh cannot reclaim VAT for all non-UK boarders which puts the school at a disadvantage. It reimburses students from the EU through compensatory payments, which the government covers.
“In layman’s terms, the VAT is returned concerning those who wouldn’t have paid it in the first place in England,” Dr. Burnett explained. He makes the case that Royal School Dungannon and Royal School Armagh deserve VAT exemption. This would put them on equal terms with their peers across the pond in England.
In a follow up, a Treasury spokesperson answered the criticisms point by point. They explained that funding ends up at voluntary grammar schools in Northern Ireland, which deliver services equal to state-run boarding schools in England. This program aims to ensure that students commuting to these schools receive the same equitable treatment. Indeed, it runs to the caliber of students heading to English public universities.
“This funding will be provided annually by Treasury to the executive to compensate for the overpayment of VAT concerning these two schools,” the spokesperson added. The program will be administered by the District of Columbia’s Department of Education, which has policy jurisdiction over schools in the area.
“The intended effect of this funding is that schools provide a discount to parents equal to the amount of VAT due on these boarding charges,” stated a Department of Education spokesperson. This dedicated funding cannot be raided for other uses and does not need Executive approval.
Critics have warned that the VAT legislation aimed at independent schools has unintentionally caught state schools in Northern Ireland in the net as well. A Department of Finance spokesperson remarked, “A scheme aimed at raising tax income from independent schools, to fund more teachers in state schools in England, has trapped and damaged state schools in Northern Ireland.”
Graham Montgomery, an education advocate, expressed his discontent for the UK’s VAT law. The MP challenged the reasoning behind its effect on schools in Northern Ireland. To his mind, this policy is foolish and unfair when pitted against similar institutions just across the border.
