VAT And School Fees

This note is intended for individuals who would like to understand more about how they could help family members who might be facing a sudden increase in school fees.

What is the current position on VAT and school fees?

Under existing VAT law, education and goods and services closely related to education such as accommodation, catering, transport are all exempt from VAT. As charitable institutions independent schools also receive 80% relief on business rates.

What are Labour's plans?

Labour has stated that if elected it intends to introduce new laws which would remove both the VAT exemption and the business rates relief with the likely effect that school fees will significantly increase. In answer to a question we have received frequently: yes this will affect tuition fees and boarding fees. Secondly, no, in our view payment of multiple years' fees in advance will not get around the issue.