Question to the HM Treasury:

To ask His Majesty's Government how they plan to apportion the revenue raised by charging VAT on school fees between the recruitment of more teachers, the creation of more nurseries and the establishment of breakfast clubs in all primary schools.

From 1 January 2025, the 20% standard rate of VAT will apply to all education services, vocational training, and boarding services provided by private schools for a charge.

It will be a commercial decision for individual schools how they fund this additional cost. Charging VAT at the standard rate of 20% does not mean that schools must increase fees by 20%.

Schools can reclaim VAT paid on inputs and reduce costs to minimise the extent to which they need to increase fees. On average, the government expects fees to rise by 10%. After recovery of VAT on their costs, on average the government expects schools to be liable for VAT amounting to approximately 15% of fee income.

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

Further detail on this can be found in the Tax Information and Impacts Note (TIIN) published alongside the Budget.