Government Issues Draft Legislation On Private Schools And VAT

As anticipated the Government has now issued its policy advice and draft legislation to remove the current charitable exemption from charging VAT by private schools (or persons connected to a private school). The announcement has been coupled with a statement that the charitable business rates relief (typically 80% of the full business rates liability) for private schools will also be removed. The Government has suggested that the increased costs should be assimilated by the private school provider, but it seems inevitable that fees payable by parents and carers will increase.

The changes are likely to take effect by 1st January 2025 in respect of charging VAT and 1st April 2025 for the change to business rates relief. Those hoping to have used the window before the changes become effective to pre-pay future years fees will be disappointed as the changes will be applied retrospectively for any payment made after 29th July 2024, the date of the policy announcement.