VAT on private school fees: What you need to know.

VAT on private school fees: What you need to know.

Did you know that private school fees will have VAT charged on them from 1 January 2025? We’ve outlined the key changes and how they may impact your spending on education.

If you have children that attend a UK private school, the recent announcement around VAT on school fees is likely to be a major concern.


We’ve summarised the main points of the announcement and what they mean for school fees.


20% VAT on private school fees from 2025

Bringing private schools into the VAT system would generate higher revenues for HM Revenue & Customs (HMRC) and provide more money to invest in state education.


There’s a debate about whether charging VAT on school fees is a good or bad move. But the reality is that it’s happening, and it’s best to be prepared.


Here are the main points to be aware of:

  • On 29 July 2024, the Chancellor of the Exchequer, Rachel Reeves, announced that 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%.


  • VAT on these fees will start from 1 January 2025.


  • Any fees invoiced or paid on or after 29 July 2024 that relate to the school terms after 1 January 2025 will be subject to the standard rate of VAT at the beginning of that term.


  • School fees paid before 29 July 2024 will follow the VAT treatment in force at the time of the normal tax point for these supplies, where the fee rate for the relevant term has been set and was known at the time of payment.


  • Adding 20% to school fees is a significant additional cost, and it will require you to reevaluate your schooling budget and consider the overall impact on your expenses.


As accountants who have worked with small business owners for over ten years, we have a wealth of experience to help you navigate these changes.


If you’d like to discuss the VAT changes with us, we’d be happy to explain the implications and help you understand the impact on your spending.