VAT on Private School Fees

As had been widely expected, the new Chancellor, Rachel Reeves has confirmed that the Labour party manifesto promise to impose VAT on private school fees will go ahead.

A new Revenue and Customs Brief 8 (2024): removal of VAT exemption for private school fees and boarding fees has been published to provide some further information on these changes for operators of fee-paying private primary and secondary schools sixth-form colleges who provide education or vocational training services for a fee.

From 1 January 2025, all education services and vocational training supplied by a private school, or a connected person, for a charge will be subject to VAT at the standard rate of 20%. Boarding services provided by a private school, or a connected person, will also be subject to VAT at 20%.

The VAT charge will apply to any fees paid from 29 July 2024 (the date of the Chancellors announcement of the new measure) pertaining to the school terms starting after 1 January 2025.

School fees that were paid before 29 July 2024 will follow the VAT treatment in force at the time of the normal tax point for these supplies, where the fee rate for the relevant term has been set and was known at the time of payment.

The Revenue and Customs Brief also states that private schools that are not currently registered for VAT should not apply to HMRC to register, at this time. HMRC will be publishing further guidance on registration for affected schools in due course.