Private Education: Business Rates and VAT

Question

As the Chancellor announced on 29 July, as of 1 January 2025, all education services and vocational training supplied by a private school in the UK for a charge will be subject to VAT at the standard rate of 20%. Boarding services closely related to such a supply will also be subject to VAT at 20%. Any fees paid from 29 July 2024 pertaining to the term starting in January 2025 onwards will be subject to VAT. Furthermore, where a school in England has charitable status, the government will legislate to remove their eligibility to business rates charitable rates relief. This is intended to take effect from April 2025, subject to parliamentary passage.

This was a tough but necessary decision that will secure additional funding to help deliver the government’s commitments relating to education and young people, including opening 3,000 new nurseries, rolling out breakfast clubs to all primary schools, and recruiting 6,500 new teachers.

The Government engages with a wide range of stakeholders with an interest in Government policy, including VAT, as part of the policy development and implementation process as a matter of course.

A technical note setting out the details of these two tax policies has been published online here: VAT on Private School Fees & Removing the Charitable Rates Relief for Private Schools - GOV.UK (www.gov.uk).

Draft VAT legislation has also been published alongside this technical note. A technical consultation on the legislation and technical note will run from 29 July 2024 until 15 September 2024.