Lord Botham

Ending tax breaks on VAT and business rates for private schools will secure additional funding to help deliver the government’s commitments relating to education and young people. Where a school in England has charitable status, the government will remove their eligibility to business rates charitable rates relief from April 2025.

Transitional relief limits how much ratepayers’ bills can change each year as a result of changes to a property's rateable value and changes to the multiplier at a revaluation. As such, support provided through transitional relief is unaffected by changes in other business rates reliefs and their eligibility.

Ending tax breaks for private schools will secure additional funding to help the government deliver its commitments to the 94% of children who attend state schools.

As a result of the January start date, the VAT policy is forecast to raise £460 million in 2024/25.

The government will use this funding to help deliver its commitments relating to education and young people, where the government has announced at Budget a £2.3 billion increase to the core schools budget for financial year 2025/26, increasing per pupil funding in real terms.

Since the announcement on 29 July, HMRC has taken action to support private schools through the change: providing detailed guidance; and allocating additional resource to process VAT registration applications. HMRC continues to engage with schools and the organisations that represent them.