30/07/2024
Changes to VAT on Independent School fees
On 29 July 2024, the Chancellor announced that as of 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%.
Draft legislation issued on 29 July 2024 seeks to prevent fees being paid in advance from avoiding the VAT charge. The proposed rules apply to fees invoiced or paid on or after 29 July 2024 and change the tax point to be the later of
- 1 January 2025, and
- the first day of that term
This will bring any payments for the Spring term within scope of the 20% VAT charge.
School fees paid before 29 July 2024 will follow the VAT exempt treatment in force at the time, but HMRC have warned that they will investigate any arrangements which they believe are flawed. The VAT change will not affect nursery provision, which remains VAT exempt, even when provided by a private school.
If any of the above issues affect you, please speak to us – we may be able to help you plan for some of the potential changes. Of course, more detail will be available after the budget and we will keep you informed then.
Please contact 023 8046 1235 or email Alan Rolfe if you would like more information on the above.
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