As we look to the new School year, we have outlined the new Labour Government's plans, that as of January 2025, private school fees will no longer be exempt from VAT.
The Chancellor has explained that they are introducing this measure as “ending tax breaks for private schools will help to raise revenue to fund state education”.
The Government has stated that: “As of 1st January 2025, all education services and vocational training supplied by a private school will be subject to VAT at the standard rate of 20%. Boarding and lodging linked to these schools will also be subject to VAT at 20%.”
Private school placement exceptions
Pupils placed in a private school because their individual needs can not be met in the state sector and have their places funded by the Local Authority will continue to be compensated for the VAT incurred.
Business rates charitable rates relief.
Approximately 50% of private schools in England are now registered charities, these schools are currently eligible for rates relief of 80%. From April 2025, the Government will also remove this charitable rates relief*.
*Business rates in Scotland, Wales and Northern Ireland are devolved. This means these changes will apply in England only.