VAT on Private School Fees

The Labour Party had made their intention to introduce changes to VAT on independent school fees clear before they had even been elected to Govern this July.

By 29 July, the policy had been 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, would be subject to VAT at the standard rate of 20%.

To prevent private schools invoicing fees in advance, the policy also stated that fees invoiced or paid on or after 29 July, relating to school terms after 1 January 2025, would also be subject to 20% VAT.

In addition to school fees, boarding costs as well as fees for reception classes and after school clubs not closely related to education (typically extra-curricular clubs), will also become subject to VAT. Nursery provision, wrap around childcare and school meals will continue to be classed as exempt supplies for VAT.

As private schools will now be able to reclaim VAT from school running costs, it may be that VAT inclusive fees will not be increased by the full 20%. The Girls’ Day School Trust (representing 23 English private schools) have announced that they will increase VAT inclusive fees by 12%. Eton College however have advised that they will be increasing fees by the full 20%.

Increased tax revenue from the changes to VAT on independent school fees will be earmarked for increased state education funding – recruitment of teachers, improved training, primary school breakfast clubs and more nursery provisions.