Planning for VAT on school fees – are you ready?

With the introduction of VAT on private school fees coming in to force from 1 January 2025, how prepared are you and what are you doing about it?

It’s crucial to assess your readiness and take proactive steps now. Our VAT specialists Debbie Jennings and Geraint Lewis have compiled a list of essential questions to help you steer this transition.

How to plan for VAT on school fees

1. How can parents avoid paying VAT on school fees?

They can’t. Eventually all parents will have to pay the VAT on school fees. But that does not mean parents should not look more closely at their own cash management and careful tax planning. There were many parents that chose not to give schools advance fees and instead have looked at ways to make their cash work harder for them to cover the VAT on school fees.

If you’re seeking expert financial planning advice and support, our team of independent Chartered Financial Planners are here to help. They can develop a personalised financial plan that truly works for you. Reach out to David Painter for more information.

2. Can I register for VAT now?

Current guidelines say not before 30 October 2024. However, you can still raise your invoices for the Spring 2025 term in December with VAT included even if you are not fully VAT registered.

3. How can I register for VAT?

Details on VAT registration is online an can be found on the GOV.UK website and follows HMRC’s guidelines and processes. You will need various documents before you get started so have everything ready.

4. What do I do if I am already registered for VAT?

This is an involved and complex question that will require the expertise of a VAT specialist. This is because a number of factors will need to be considered, for example:

• Are you in a VAT group or not?
• Do you have a trading subsidiary?
• Do you already apply a partial exemption calculation, and do you understand how this will need to change?
• Are you a day school or a boarding school?
• Are you an all-through school with a nursery provision?
• How many of your children are local authority placements and/or have special educational needs (SEN) requirements?
• Do you know how much of your activity is not related to education?
• Do you understand the impact of awarding bursaries and scholarships?
• Have you evaluated your Capital Projects in relation to the Capital Goods Scheme? (this also applies even if you’re not registered).

NB: Please note that none of these questions are mutually exclusive, and each school will have its own individual VAT profile.

5. How will my systems cope with the introduction of VAT on school fees?

Your system must be compliant with Making Tax Digital and you will need to ensure your invoice templates are updated.

Further details on what you need to do can be found in our insight How will accounting systems handle the introduction of VAT on school fees?.

How we can help plan for VAT on school fees

If you require additional support our VAT specialists, Debbie and Geraint have extensive experience in all areas of VAT and offer practical, hands-on support to their clients.

They are heavily involved in preparing for and assisting schools with the introduction of VAT on school fees. This has included assessing potential opportunities for mitigating the impact of VAT (where appropriate) for the schools and the parents, and most recently, analysing the additional material released by the Labour government to determine the practical impact on the sector.