Measure
As previously announced, from 1 January 2025, education services and vocational training supplied by a private school or a “connected person” for consideration will be subject to VAT at the standard rate of 20%. The standard rate will also apply to boarding services that are “closely related” to such supplies. The government will also remove business rates charitable rate relief from private schools in England from April 2025.
The government has published its response to the technical consultation, and has addressed a number of minor issues identified in the draft legislation and guidance. The legislation and HMRC guidance will be amended accordingly.
Private schools and connected parties, as well as parents and guardians whose children are in private education.
School fees paid on or after 29 July 2024 for education provided after 1 January 2025. School fees 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.
Having been the object of much speculation, the referable budget resolution now has been passed. Private schools are now able to register for VAT in response to the changes announced on 30 October 2024. Exactly when individual schools will need to register for VAT will be determined by reference to when fees for school terms starting on or after 1 January 2025 have, or will be, received.
It is expected that this policy expected to raise £1.5 billion in 2025-26.