Question to the HM Treasury:

To ask the Chancellor of the Exchequer, whether the proposed removal of the VAT exemption for private school fees will include tuition centres that provide (a) only after school and weekend services and (b) full time services.

On 29 July, the Government announced that, as of 1 January 2025, all education services and vocational training provided by a private school in the UK for a charge will be subject to VAT at the standard rate of 20 per cent. This will also apply to boarding services provided by private schools.

All institutions that meet the definition of a private school set out in the draft legislation are within scope of this policy. The draft legislation can be found online here: https://assets.publishing.service.gov.uk/media/66a7a1f8a3c2a28abb50d8c1/Private_Schools_Draft_Legislation_-_DIGITAL.pdf

This definition includes music schools, dance schools, Centres for Advanced Training, and tuition centres where they charge fees for full-time education for pupils of compulsory school age. Institutions that charge fees for full-time education suitable for people over compulsory school age but under 19 (such as sixth forms) are also within scope of this policy.

All education services, vocational training, and boarding services provided by institutions that meet this definition of a private school will be subject to VAT, including extracurricular classes. The VAT treatment of Special Educational Needs therapies will depend on the type of therapy and who it is provided by. If the therapy is a means of supporting the education delivered to and is provided by the private school, it will likely be subject to VAT. If it is a type of therapy that qualifies for the health and social care VAT exemptions (for instance, occupational therapy), it will remain exempt from VAT. This policy does not affect the VAT treatment of services provided by an unconnected third-party who carries out their services on a private school’s premises.

The full fees of pupils in receipt of funding through the Music and Dance Scheme will be subject to VAT. The right time to consider any changes to schemes such as the Music and Dance Scheme is at the Spending Review.

The Government does not expect fees to go up by 20% as a result of this policy change, and the Government expects private schools to take steps to minimise fee increases.

Further details on this policy can be found in the technical note published alongside the legislation. The technical note can be found online here: https://assets.publishing.service.gov.uk/media/66a7a1bdce1fd0da7b592eb6/Technical_Note_-_DIGITAL.pdf

HMRC will also be publishing bespoke guidance for schools, and holding support sessions to help them understand their liabilities as a VAT-registered business.