Private school fees

The government’s draft legislation to impose a 20% VAT charge on private school fees and boarding services, scheduled to come into effect from 29 July 2024, is designed to increase tax revenue by targeting these fee-based services, but it exempts pupils with significant special educational needs that can only be accommodated by private schools. This exemption likely aims to protect vulnerable groups that rely on specialized education not readily available in public settings.

Despite the introduction of this tax, there are safeguards in place to ensure that paying for several terms in advance will not allow families to bypass the VAT, signaling that the government is keen to close any potential loopholes. Additionally, private schools will lose eligibility for business rates charitable relief starting in April 2025, another measure that will impact their financial operations and further increase the tax burden on these institutions.

These changes align with broader government efforts to equalize the tax treatment between private and public education providers, as discussed in various tax publications, including proposals to review charity benefits and tax exemptions​​​.

Private schools will need to make sure that they are dealing properly with VAT compliance going forwards. Please get in touch if you have any concerns in this area.