Update on VAT and Private Schools

Effective from 1 January 2025, all education services, vocational training, and boarding services provided by private schools or connected entities became subject to VAT at the standard rate of 20%.

Classes for children of nursery school age will continue to remain exempt from VAT. 

This means that private schools that were not VAT-registered will have needed to register with HMRC by 1 January 2025 or as soon as value of the school’s taxable income exceeded £90,000. However, schools below this threshold can choose to register voluntarily for VAT. If you would like to find out whether voluntary registration would be advantageous, please click here.

Challenge to the removal of the VAT exemption on private education.

For those parents and schools that have been impacted by the new measure, now paying an additional 20% VAT on school fees, a legal challenge is underway. A group of six families, supported by the Independent Schools Council, are taking Rachel Reeves (as Chancellor) to Court to challenge the decision to impose VAT on private education fees.  This is on the basis that it infringes Article 14 of the European Convention on Human Rights.  The case will be heard in the High Court between 1 and 3 April 2025 and we will keep you updated with the decision and progress that the case takes through the Courts.

How HB&O can help you

The removal of the VAT exemption on private school fees shows a significant change in the taxation landscape for private education in the UK. The new regulations required both schools and parents to prepare for this adjustment, and the long-term effects on the sector are yet to be fully understood.

If you would like advice and support with the VAT registration process or wish to explore opportunities to maximise VAT recovery on historic capital expenditure incurred by the school, please get in touch with our specialist VAT department, and a member of the team will be able to assist you with your queries.

We will be sharing further updates on the VAT case here, on our Knowledge Hub, so check back regularly to stay informed on the latest developments.

Email: [email protected]  

Phone: 01926 422292