Welcome to our VAT on school fees hub
Our goal is to provide clear, concise and up-to-date information to help you understand how the changes to VAT will impact your school fees. Whether you’re looking for guidance on VAT exemptions, compliance requirements or the latest regulatory changes, you’ll find valuable insights and resources here.
Overview of the proposal
A proposal was recently announced that aims to impose VAT on private school fees. This move is part of a broader plan to generate additional revenue for public services, particularly within the education sector. The government believe that taxing private education will help level the playing field between state and private education, potentially raising billions in additional funds.
When will VAT on school fees start?
The VAT on private school fees will take effect 1 January 2025. From this date, all costs for tuition and boarding at private schools will be subject to VAT.
Key points of the VAT on private schools’ proposal
- VAT rate: Private school costs, including tuition, boarding, and vocational training services, will be subject to a 20% VAT charge.
- Exceptions: There are some exemptions, including fees for children with acute Special Educational Needs (SEN) that require private education. Nurseries and private tutors will also remain VAT-exempt.
- Business rates relief: Private schools will lose their eligibility for charitable business rates relief, further increasing costs for many institutions.
- Impact on costs: Schools will need to decide whether to pass the VAT burden directly to parents or absorb some of the cost. Some schools, like Eton College, have stated they will pass on the full VAT to parents, while others, like The Girls’ Day School Trust (GDST), plan to absorb part of the cost.
How will VAT on school fees affect parents and students?
- Prepayment strategies: Many parents attempted to prepay fees before 29 July 2024 deadline to avoid VAT. However, the government has indicated that such strategies may be scrutinised by HMRC, potentially leading to tax assessments.
- Financial planning: Schools are working to offer flexible payment plans, bursaries, and hardship funds to support families impacted by the increased costs.
For more information or guidance around VAT on school fees, contact our expert team today.
