News

18 October 2024

Registration for VAT for Private Schools

If you have children that attend a UK private school, the recent announcement around VAT on school fees is likely to be a major concern.

We’ve summarised the main points of the announcement and what they mean for school fees.

20% VAT on private school fees from 2025.

Bringing private schools within the VAT system is aimed at generating higher revenues for HM Revenue & Customs (HMRC) and providing more money to invest in state education.

There’s a debate to be had around whether charging VAT on school fees is a good or bad move. But the reality is that it’s happening and it’s best to be prepared.

 

Here are the main points to be aware of:

  • On 29 July 2024, the Chancellor of the Exchequer, Rachel Reeves, announced that 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%.
  • VAT on these fees will commence from 1 January 2025.
  • Any fees invoiced or paid on or after 29 July 2024 that relate to the school terms after 1 January 2025 will be subject to the standard rate of VAT at the beginning of that term.
  • 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.
  • Adding 20% to school fees is a significant additional cost and will mean you revaluating your budget for schooling and considering the overall impact on your expenses.

 

Who must register for VAT.
You must register for VAT if you’re a private school or connected person that supplies education services, vocational training or boarding services and either:

  • Your total taxable turnover for the last 12 months is over £90,000
  • You expect your total taxable turnover to go over £90,000 in the next 30 days

When you must register
Education providers will be able to register for VAT from 30 October 2024.

The exact date when you need to register for VAT will depend on:

  • The value of school fee payments you receive for terms starting on or after 1 January 2025
  • The date you receive the payments

Payments include registration fees paid during the application process to attend a school.

If you receive payments in advance then you may need to register before 1 January 2025, depending on when you received the payment.

 

If you think this will affect you, contact us and we can get you registered.

Back to all news