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The landscape of private education in the UK is set for a significant shift. From January 1, 2025, private schools will be required to charge VAT at the standard rate of 20% on their fees. This change, long discussed and now confirmed, will affect thousands of families across the country.
What’s Changing?
Private schools will need to apply VAT to:
- Education services and vocational training
- Boarding services related to education
- Before and after-school activities with an educational element
- Extra-curricular activities like arts and sports clubs
The new rules apply to schools providing full-time education for compulsory school-age children and institutions educating those over compulsory school age but under 19.
Key Points for Parents:
- Timing: The change takes effect from January 1, 2025.
- Pre-payments: Fees paid on or after July 29, 2024, for terms starting January 1, 2025, or later, will attract VAT.
- Nurseries are exempt: The charge applies from the first year of primary school.
- State schools and further education colleges remain VAT-exempt.
Preventing Avoidance:
The government has introduced measures to prevent VAT avoidance through advance payments. Any fees paid from July 29, 2024, for education provided from January 1, 2025, will be subject to VAT. The government will also scrutinize lump sum payments made before this date.
What This Means for You:
If your child attends a private school, you can expect a significant increase in fees from 2025. The additional funds raised will be directed towards state education.
Private schools not currently VAT-registered will be able to register from October 30, 2024. This gives them time to adjust their systems and pricing structures.
As we approach this significant change, parents should start planning for the increased costs. Schools may also be reviewing their fee structures and services in light of these new regulations.
Stay informed and consider discussing the implications with your school and financial advisor to ensure you’re prepared for this substantial shift in private education funding.