Last week, the treasury announced details of its plans to remove VAT exemptions for education services, boarding services and vocational training supplied by private schools, or a connected person.
As of the 1st of January 2025, all charges for the aforementioned services will be subject to VAT at the standard rate of 20%. This impacts any fees invoiced or paid after the 29th of July that relate to school terms after the 1st of January.
This policy change does not affect nurseries or pupils with special educational needs that cannot be met by the state sector.
This shift to remove VAT exemptions for private schools and their connected service providers will have a greater effect on the least wealthy, and will potentially increase pressure on state schools. It is also important for those who provide vocational training services such as music teachers and private tutors to be aware of this change as they will also be effected by the announcement.
In addition to the removal of VAT exemptions for private schools, the government is also consulting regarding its plan to remove business rates relief from private schools that are registered as charities. This would only apply to schools in England and further information should be announced in due course.
We advise any schools or connected people to begin reviewing what VAT they can claim back from their expenses to gain a holistic picture of the effect this change will have on them and their pupils.
Contact our tax experts for further guidance.