VAT on private school fees

Following the election of the Labour government, they confirmed the position yesterday regarding the anticipated application on private school fees which can be found here VAT on private school fees.

To summarise, from 1 January 2025, VAT will become applicable to both tuition fees and boarding fees payable to a private school or a connected party. Other supplies made by private schools, such as learning materials, school meals and wrap around care will not be impacted by this.  Draft VAT legislation has been issued to define a ‘private school’ as the following:

1. a school at which full-time education is provided for pupils of compulsory school age or, in Scotland, school age (whether or not such education is also provided for pupils under or over that age), or

2. an institution at which full-time education is provided for persons over compulsory school age but under 19 and which is principally concerned with providing education suitable to the requirements of such persons (for example, a sixth form college)

The government have confirmed that where education is provided at a private school due to the specific educational needs of students, this will remain exempt.

Anti-forestalling provisions have also been introduced for all pre-payments of private school fees and boarding services on or after 29 July 2024 but before 30 October 2024, to treat education or vocational training that is due to be delivered after the changes are formally introduced as being subject to VAT at the standard rate. For pre-payments made prior to 29 July 2024, specific conditions must be met to allow these to be remain as exempt.

Outside of VAT, the government will also end business rate relief for private schools, thus stopping the eligibility of these schools for charitable rates relief. This aspect of the measure is set to take effect from April 2025.

As further details are released, we will continue to update you.  If you would like to discuss this in more detail, please reach out to our VAT team – vat.western@hwca.com