Harrow (Parliament Politics Magazine) – Top private schools including Harrow and Dulwich are under scrutiny after reports reveal they’ve made millions in tax-free profits despite their charity status.
Several well-known institutions donate millions of their yearly income to their UK schools through Gift Aid, including Dulwich College, Harrow School, and Wellington College.
Due to the arrangement, they must pay corporate tax on the money, which is currently 25%. Because British schools are still registered as charities, they remain eligible for the tax benefit, which is distinct from the VAT exemption that the Labour Government terminated.
The announcement of the additional funding, which can total several million pounds annually for each UK school, comes as parents are already struggling with steep price increases.
The Independent Schools Council (ISC) announced this week that private schools were increasing tuition by an average of 22.6% a year, with the introduction of VAT being identified as the main cause.
According to an analysis of private schools’ annual Charity Commission returns by the Private Education Policy Forum (PEPF), 48 of them made a total of £152.4 million from satellite campuses over a twelve-year period, from 2011–12 to 2022–23.
According to the think-tank, £28.9 million, or enough to cover 12 million free school lunches, would have been paid in corporation tax if the earnings had been taxed at the 19% rate that was in effect at the time.
“Private schools are undoubtedly, just like the rest of the education sector, under more financial pressure as a result of taxation or, in the state sector, severe cuts,”
The forum said.
“But this report is a reminder that although VAT has been applied, private schools still count as charities and do not pay corporation tax – and so can still bring in huge sums of money from overseas ventures such as this.”
ISC chief executive Julie Robinson said independent schools were looking for ways to reduce their reliance on income from fees.
“The money generated is invested back in education in the UK, usually through bursaries and scholarships,”
She said.
“The majority of schools within ISC are small, local day schools for whom opening an international satellite would not be an option,”
She added.
Most, but not all, of the prestigious universities it examined spent more on bursaries than they earned abroad, which the PEPF said was positive.
But the forum added:
“With only two per cent of all places in private schools free, the sector must ask itself whether it has seriously tried to open its educational offer to ordinary children from ordinary-income families, thereby justifying charitable status.”
The most money was earned abroad at Harrow School, where boarding costs increased by 15% in January to £61,584 annually. China, Hong Kong, Japan, Thailand, and India are home to its twelve overseas outposts.
According to the most recent filings, the UK school got tax-free Gift Aid donations of £5.265 million in 2022–2023 and £5.497 million in 2023–2024 as a result of their revenues.
According to records from the Charity Commission, in 2022–2023, seven more private schools in Britain got at least £1 million from untaxed foreign income.
They asked Cranleigh School, North London Collegiate School, Brighton College, King’s College School, Wimbledon, and Harrow for their opinions.
According to the PEPF research, there has been a recent boom in the number of private schools opening campuses abroad, with 25 new ones opening since 2021–2022, increasing the total to 151 in 2024–2025. The number of British institutions with abroad operations now stands at 53, with plans to open 28 more satellite campuses in the near future.
Among them is Wellington College, which sent £3.192 million in international revenues in 2022–2023 and another £2.889 million in 2023–2024 through Gift Aid.
The Crowthorne, Berkshire-based school, which in January increased its boarding prices in the UK by 15% to £59,940, now has franchisees in China, Thailand, and India.
Wellington’s international school income, according to a spokeswoman, are completely donated to charities “to support our broad educational mission both within and outside the college.” This includes public benefit programs like our educational grants program, which has awarded £2.5 million to dozens of partner state schools in recent years, as well as bursaries, some of which were for “young people from disadvantaged backgrounds.”
In 2022–2023, Dulwich College received £1.9 million in Gift Aid from overseas revenues. Starting in September, boarding costs will be £64,266—more than 16 percent more than the previous year.
According to the South London school, which currently operates franchisees in China, South Korea, and Singapore, charities operating businesses and using the income to further their charity goals is a tried-and-true method of furthering their objective.
All proceeds from Malvern College’s overseas schools are “invested back in education in the UK, not only through bursaries and scholarships, but through the continuous development and improvement of our historic campus to provide the facilities needed for a modern education, many of which are used by our wider local community,” according to the college, which received a £1.6 million “contribution” from overseas in 2022–2023.
A Government spokesperson said:
“Ending VAT and business rates tax breaks for private schools will raise £1.8bn a year by 2029-30. This money will go back into the public purse to fund the services people rely on – including supporting the 94 per cent of children in state schools to achieve and thrive.”
How do private schools like Harrow and Dulwich justify their tax free profits?
Private schools like Harrow and Dulwich mostly use their nonprofit status and the public advantages they offer—especially through means-tested bursaries and educational outreach—to defend their tax-free revenues.
By providing financial aid to students from less affluent homes, these institutions, which are recognized charities, assert that they are serving the public interest by increasing access to education.
Many institutions point out that the money made from satellite campuses abroad goes towards funding means-tested scholarships and bursaries in the UK, which helps students who otherwise couldn’t pay the tuition.
Schools encourage tax-efficient fee payment methods, like “fees in advance” plans, which let parents pay fees up front and let the schools use the money for tax-free investments.