Question to the HM Treasury:

To ask the Chancellor of the Exchequer, pursuant to the Answer of 28 October 2024 to Question 10422 on Private Education: VAT, if she make an estimate of the cost to the public purse of VAT reclaimed by independent schools for capital spending for items under ten years old.

The government published its response to the VAT on private school fees technical note at the Autumn Budget.

This can be found online here: Government_Response_to_the_Technical_Note_on_Applying_VAT_to_Private_School_Fees_and_Removing_the_Business_Rates_Charitable_Rate_Relief.pdf

Annexed to the consultation response is a detailed explanation of the costing methodology used, including the estimation of pupil movements. Where movement occurs, the government expects many of these moves to take place over a number of years at natural transition points, such as when a child moves from primary to secondary school, or at the beginning of their GCSE or A-Level years. Furthermore, some of this movement will result from parents opting not to send their child to private school when they otherwise might have done, rather than removing their child from a private school.

In the same document the government has set out its estimate of the effect of the Capital Goods Scheme on input tax recovery. This adjusts input tax recovery on certain (mainly property) assets acquired over the previous 10 years over the remainder of the 10-year period since their acquisition, aligning it with the business’s current input tax recovery status. This adds £60 million to input tax recovery in the first year, reducing to around £30 million by 2029/30.