Scope of the VAT introduction to private school fees
There has been significant discussion surrounding the scope of the change of private school fees (to 20% VAT) from the start of the January 2025 term, which has required private schools to register for VAT.
The legislation is precisely written and applies only to private schools, leaving the remaining VAT exemption for education unchanged. This means that training events offered by eligible bodies (not-for-profit organisations) and tuition (for example, riding schools) provided by sole proprietors or partners remain exempt.
What additional income is subject to 20% VAT, beyond fees?
- Extra specialist lessons
- Accommodation for its own pupils
- Uniforms for children aged 14 and older
What other income or supplies are not impacted and remain VAT exempt?
- Nursery education - whether funded by parent fees or grants
- Advance payments made by parents, received by a private school before 29 July 2024
- Educational trips for pupils
- Examination services
- Bursaries, if not received for named pupils do not constitute a supply for VAT purposes, since no service or benefit is provided in return to the donor
- School meals, if separated invoiced. Further information on this will be covered in an upcoming article
- School transport, which remains VAT zero rated, if in a minibus holding 10 or more
- Before and after school clubs, and holiday clubs
- Rental of rooms and halls is generally exempt from VAT, but the school has the option to "opt to tax" the rent if desired
If you wish to discuss this in further detail, please get in touch with one of our Indirect Tax team members.
