VAT on school fees - October 8th 2024

VAT at 20% will be charged on school fees from the beginning of 2025. While the government has said it does not expect private school fees to go up by the full 25%, some schools, such as Eton College, will be passing on the whole amount.

Unlike many VAT-registered businesses, schools have a relatively small amount of VAT on costs to set against their output tax as typically around 75% of a school’s budget goes on staffing costs. This makes it difficult for schools to absorb much of the increase. The Girls’ Day School Trust, however, has said it will only pass on 12% this year although this could change in the future.

Anti-forestalling legislation will block any attempt to avoid VAT by paying fees in advance. Any fees paid after 28 July onwards for terms starting in or after January 2025 will be subject to VAT.

Exemptions in Ireland

Some parents are avoiding the increased fees by enrolling their children in schools in the Republic of Ireland, where school fees remain exempt from VAT.

Business rates relief

Many private schools will also suffer increased costs with the removal of business rates relief from April 2025. Schools in England that have charitable status are currently eligible for rates relief of 80%. The government is considering the impact on pupils with special educational needs where private school provision has been specified in an Education, Health and Care Plan.