It was a Labour manifesto pledge for there to be VAT applied to Private School Fees and prior to the Summer Recess the Government published a consultation on how to introduce this measure.
Back in July 2024 they even went so far as to release draft legislation as to how it would be enacted. So, the announcement in the Autumn Budget was not a surprise, despite many professionals suggesting it should be deferred to allow time for a more thorough implementation.
In summary, as of 1 January 2025, all education, boarding, and vocational training provided for a charge by a private school in the UK will be subject to VAT at the standard rate of 20 per cent. Any fees paid after 29 July 2024 relating to the term starting in January 2025 onwards will be subject to VAT. The ramifications were actually wider than that as the Government also announced that schools in England with charitable status would lose their eligibility to business rates charitable rate relief from April 2025.
These measures are going ahead and the consultation has led to some amendments to the draft legislation which is encouraging. It is anticipated that these policies are expected to raise around £1.8 billion a year by 2029/30, which will help deliver the government’s commitments relating to education and young people.
It has been confirmed that Schools within scope of this policy can now register for VAT and bespoke guidance has been issued to schools impacted by the measure.
If you have any questions about how the budget or its proposed reforms might affect you, do get in touch on 01242 776000 or tax@randall-payne.co.uk.
